Last December the Export-Import Bank, which helps finance foreign purchases of U.S. exports, announced it would stop financing coal-fired power plants abroad, with a few exceptions in the poorest countries in the world. Now, as political pressure puts the bank’s future in to question, those environmental guidelines are facing opposition in Congress. With a September 30 deadline for reauthorization, the efforts to reduce high carbon intensity projects are being used as political cover by far-right Republicans who have reversed course and decided to consider the bank as a form of corporate welfare after years of supporting it.
Both of the working proposals in the House and Senate to renew the bank’s charter would reverse Ex-Im guidelines that prevent financing for overseas power plants, according to the Hill. Thousands of businesses use the bank for loans and insurance for exports. While the bank has been accused of pay-for-play politics and once funded failed energy giant Enron, the current movement is based around government overreach into the free market and is aligned with recent attacks on the EPA’s proposals to cut carbon pollution from fossil fuel-fired power plants.
The 80-year-old bank borrows money from the U.S. Treasury to help American companies sell their exports abroad. It provides low-cost loans to foreign buyers as well as guarantees against potential losses for exporters. As part of the Obama Administration’s Climate Action Plan, the Ex-Im Bank board voted last December to stop funding the construction of new coal plants overseas. The bank has also funded a number of renewable energy projects, including U.S. solar-modules to Mexico, thin-film solar panels to India, and materials for solar projects in Spain and Africa.
Current opposition to the bank’s re-authorization is significant. Rep. Jeb Hensarling, (R-TX), chairman of the House Financial Services Committee, which has jurisdiction over the bank, has lead the charge and incoming house leader Kevin McCarthy (R-CA) recently declared his opposition even though he backed the bank in 2012 during the last vote on reauthorization.
With many Republicans having supported the bank — which funds projects for Boeing and General Electric, and is supported by the U.S. Chamber of Commerce and the National Association of Manufactures, in the past — rallying behind the effort to get coal projects back on the docket could provide some political cover for their change in position.
Joe Manchin (D-WVA), chairman of the Senate subcommittee that oversees the Export-Import Bank, is taking more of a middle path, having proposed legislation to renew the bank’s charter while at the same time largely preventing the bank from enforcing the stricter standards adopted in December when it comes to financing coal-fired power plants. The current requirements call for a project to use carbon capture-and-storage techonology for approval. In the poorest countries new plants would only be required to use the cleanest available technology. According to the Hill, Manchin’s proposal would effectively expand the second group.
Manchin, who leads the Senate Banking Committee’s panel on national security, international trade and finance, has proposed reauthorizing the bank for five years and increasing its credit-exposure limit to $160 billion, up from the $140 billion limit agreed to in 2012. He said his proposal “would enable more widespread use abroad of U.S. companies’ more efficient coal technology, rather than sidelining it.”
“There are seven billion tons of coal being burned outside the U.S. each year. If we are truly committed to cleaning up our global environment, the U.S. should lead the world in clean coal technology and export that technology to the rest of the world,” Manchin said in a statement last week.
The Ex-Im Bank is currently considering financing a 4,000 MW power plant and coal mines in northeastern India. It doesn’t matter that this goes against the recent efforts to reduce funding for high-intensity carbon projects because in January the guidelines were temporarily suspended until September due to a measure in the House appropriations bill.
“The Ex-Im bank has opened a new front in their war for survival by openly defying President Obama’s overseas coal restrictions to support a project mired in local controversy,” Justin Guay, associate director for the international climate program at the Sierra Club, told ThinkProgress. “By undermining this key aspect of the Climate Action Plan they are giving the administration a black eye. They’ve gone rogue and it’s time to reign them back in and withdraw consideration of the Indian coal plant.”
Guay said that Democrats are going to have to stand up to Manchin. “If he succeeds in reversing the coal restrictions the bank will be nothing more than a multimillion subsidy to the fossil fuel industry.”
Last month, future House leader Kevin McCarthy told Fox News that he would kill the “crony capitalism” of the Ex-Im Bank.
Tea Party groups like Americans for Prosperity, funded by the conservative Heritage Foundation and the Koch brothers, have opposed the Ex-Im Bank for years, having tried a number of angles to generate political push-back and turn the tide of opinion in their direction.
While the Ex-Im Bank becomes political football for infighting within the Republican party and throughout Capitol Hill, other major lenders are curtailing financing of overseas coal plants. Britain, Sweden, Norway and Finland have pledged to halt the practice. The World Bank, the U.S. Trade and Development Agency, the European Investment Bank, and the European Bank for Reconstruction and Development (EBRD) are also moving away from financing coal plants overseas.