Mother Jones illustration. Chris Kleponis/CNP/ZUMA; Do/PlanetPix/ZUMA
in glasgow At the 2021 Climate Summit, the Biden administration presented the world with a promise that the United States would end public financing of oil and gas projects. The White House said U.S. tax dollars will no longer be used to build new natural gas pipelines or wells.
The pledge drew praise from climate change activists. But there was one big problem. That was an empty promise.
Several years have passed since Glasgow, USA. have It continued to fund fossil fuel projects around the world. The latest example came on Thursday, when the U.S. Export-Import Bank finalized a plan to guarantee a portion of the loan for a $4.2 billion natural gas production revitalization in the Bahrain nation. The move comes just weeks after the Biden administration triumphantly announced a policy freeze. Domestic The development of new projects aimed at exporting liquefied natural gas includes the construction of dozens of gas wells and 450 new oil wells. This would provide 5.2 trillion cubic feet of natural gas, equivalent to approximately five years of additional gas production at current levels in Bahrain.
ExIm Bank was founded in 1934 by FDR to lend money to foreign customers who wanted to buy American products and to export geese. Although the company is backed by the U.S. Treasury, it has actually been giving back profits for the past two decades, a fact that tends to shield it from political scrutiny. But in recent years, it has become something of a target for fiscal conservatives and has drawn criticism from Republicans, who were loyal to the Tea Party during the Obama administration. It was mostly dormant during the Trump administration, but was revived after Biden took office.
Officially, the bank is an independent agency within the executive branch, but it has traditionally largely adhered to broader U.S. policy, such as ensuring that sales of planes and trucks to Cold War allies were financed and that U.S. manufacturing It has supported employment. That's why the Bahrain deal and other recent oil and gas projects approved by banks are so attractive to clean energy advocates. And there is no end in sight. Among the fossil fuel initiatives on the shortlist for Exim Bank consideration later this year is a liquefied natural gas project in Papua New Guinea. The project has struggled to find financial support from European banks, but could produce up to 11 trillion cubic feet of gas if ExIm awards the deal.
According to the Export-Import Bank's own annual report, of the $34 billion in outstanding debt currently on its books, $8.1 billion, including direct financing and loan guarantees, is for oil and gas projects. This figure is down from the $10.8 billion in 2021 that the Biden administration announced its commitment to Glasgow, but still accounts for more than a quarter of the bank's total financial exposure. The bank has touted the fact that it loaned $950 million to green energy and climate-friendly projects last year, almost all of it for a single project to build a giant solar power plant in Angola. According to a calculation by an environmental organization, the following was found. In 2023, banks were also involved in loans of at least $1.7 a billion in new oil and gas projects.
This direct conflict with clearly articulated management policies is possible due to the nominal independence of banks. The company is supposed to make its own decisions, evaluate its own deals, and make deals that support the American economy without political interference.
But in reality, governments have considerable influence over banks and their priorities. The President appoints the Directors and the Board of Directors with the approval of the Senate. The bank's current president and chairman is Reta Joe Louis, a longtime Democratic operative and trusted Biden ally who worked in the Clinton and Obama White Houses. Publicly, the Biden administration has recently signaled that it is not satisfied with its banks. Last year, when banks approved loans to expand oil projects in Indonesia, a spokesperson for the Biden administration's National Security Council said: bloomberg news ExIm said it “takes independent decisions to approve loans under the authorities and its decisions do not reflect administrative policy.” The statement was a notable attack from one part of the Biden administration on another, but it was also not accompanied by further action.
For critics, The recently approved Bahrain project is an excruciating example of banks' failure to adhere to the administration's stated policy on financing fossil fuel projects. Defenders of the banks will point out that the government's promise in Glasgow is just a promise, not law. The bank has defended its oil and gas investments, pointing to laws that prohibit discrimination in projects based on industry.
The project aims to revitalize Bahrain's largest oil and gas fields, which have generated huge profits for decades but appear to be starting to decline. The funding would be a major boost for the small island nation, a staunch ally in a volatile region. In addition to being an economic and energy partner, Bahrain is also home to a large U.S. military base that houses Naval Central Command and the 5th Fleet.
Representative Jared Huffman, a Democrat from California, has proposed a bill that would prohibit taxpayer funding of oil and gas projects from government-backed international financial institutions, including the Export-Import Bank, the U.S. International Development Finance Corporation, and the U.S. Trade Development Agency. I'm supporting it. .In a recent interview he said: mother jones Taxpayer support for projects like Bahrain's is prohibitive on many levels, including the environmental impact. Natural gas accounts for more than one-third of all greenhouse gas emissions in the United States. This comes in the form of both methane leaking from natural gas infrastructure and carbon dioxide produced by burning gas for energy.
“This is a methane bomb,” he says. “It not only goes against our climate policy and everything we say…it will have a huge impact on the climate crisis. It will significantly expand Bahrain's natural gas production, and it will increase this natural gas It means decades of addiction for the countries that buy it.”
So the Bahrain deal, along with other oil and gas projects involving the Export-Import Bank, will hurt the U.S.'s ability to negotiate on climate change in the future, Huffman said.
“When we go to the next climate summit and ask the world to take us seriously, our credibility, our prestige, is damaged,” he explains. “Things like this make it even more difficult.”
said Sen. Jeff Merkley, an Oregon Democrat who is working with Huffman on the bill. mother jones The bank claimed it had “acted fraudulently” in Bahrain's decision.
“The plan to support the drilling of hundreds of new oil and gas wells in Bahrain is the latest in a series of decisions that undermine our country's climate credibility on the international stage,” Merkley said in a statement. “The Export-Import Bank should support the fight against climate change, not undermine it.”
The borrower in the case of the Bahrain project was Tatua Petroleum, which is owned and operated by the Bahraini government, which further upset Huffman. “They don’t need taxpayer support,” he scoffed. “It's ridiculous to think that these big oil and gas interests or Bahrain need taxpayer money.”
The project ostensibly qualifies for Export-Import Bank support because SLB (formerly known as Schlumberger Brothers), an oilfield services company with significant operations in Texas, will be the primary material supplier. There is.
The bank announced Thursday that it would guarantee a $500 million loan for the project, which it claimed would support up to 2,100 jobs in Texas. Banks don't put actual taxpayer money on the table unless a loan defaults, but critics argue that the financial details are less important than simply getting approval from the U.S. government.
“The far bigger impact is that the Export-Import Bank comes in and allows the private banks to come in, knowing that the U.S. takes most of the risk,” said Kate, senior international finance program manager at the financial institution. DeAngelis says. Friends of the Earth. “It actually brings billions and tens of billions of dollars to projects that can advance projects that otherwise wouldn't be possible.”
ExIm's involvement comes as Wall Street and traditional sources of funding for large oil and gas projects are challenged to reassess the impacts and potentially increased financial risks of fossil fuel investments. It is a stamp of approval that sends a signal to other financial institutions. Financial officials argue that such projects are still very welcome by the United States.
The bank is defended its recent decision, noting that its job is to fairly consider future projects. “EXIM strives to be consistent with government climate change policies while adhering to EXIM’s legal requirements, including the prohibition of discrimination based solely on industry, sector, or business, and EXIM’s mission to support American jobs.” ” said a bank executive. Mother Jones.
But critics like DeAngelis say that in addition to violating the government's own policies regarding public financing of oil and gas projects, many of the investments made by the Export-Import Bank are not economically viable or in the national interest. I would argue that it is unwise from your point of view.
“They're just taking enormous risks. Why would ExIm choose those projects?” DeAngelis said. “I'm confused about that. And from another perspective, why is the U.S. government involved with the Bahraini government?”
All this raises the question of how the Export-Import Bank makes decisions. Some see this as a matter of inertia, as banks have supported fossil fuels for years. Colin Rees, U.S. program director for activist group Oil Change International, said there is a pattern of behavior that favors the known.
Companies that lobby the bank are required to disclose information, but the content is quite sparse. For example, the Bahrain project's lead private financier is Wall Street giant JPMorgan, which spent $3.5 million lobbying in Washington last year. It's unclear how much of that was spent influencing ExIm.
“It's a complex system and it's difficult to apply for these. Certain companies come up again and again,” he says. “These particular companies have spent time learning the system, but they also see it as a trusted source of information.”
As Huffman says, “The system is built into fossil fuels.” Oil and gas interests and the U.S. government have long had a good relationship, he said, and fossil fuels remain a great geopolitical tool.
“I think they're trying to outdo China and others to develop fossil fuels in Bahrain. This is about powerful American companies and rich Middle Eastern countries,” Huffman said. “And the default setting is just going to be more fossil fuels forever.”
Instead, Huffman argues, the U.S. should put money into competing with China on clean energy.
However, changing the direction of large financial institutions is easier said than done. Biden installed loyalists at the top of banks and issued an executive order in early 2021 directing government agencies to promote climate-friendly lending. And he created a “climate council” within the bank to provide advice on how to support clean energy jobs and exports. But the council appears to have no real role in the process of deciding what loans to make going forward, and two members recently resigned due to lack of input.
The main power that Congress can exercise over banks lies in their reauthorization, or the requirement that Congress reauthorize their existence every few years. The next reauthorization is scheduled for 2026, and is expected to face strong opposition from right-wing lawmakers who view the bank as a profiteer. Many Democrats are likely to be sympathetic to the climate change debate, but may be reluctant to risk large amounts of political capital in a fight aligned with Ted Cruz and others.
But Huffman wants a complete overhaul of the Export-Import Bank from the top.
“Banks need new leaders,” he says. “Perhaps they should pass a reading test where the executive order on climate change is presented, and we should see if they read it.”
