Ensuring the US Export-Import Bank Reflects American Values

On the cusp of America’s entry into World War II, Franklin D. Roosevelt articulated the “four freedoms” as the aims for the entry of the United States into the war and the premise for our international engagement. The four freedoms mentioned by FDR include freedom of speech and expression, freedom to worship, freedom from want, and freedom from fear. 

As we celebrate Independence Day this year, it’s worth considering what principles should drive our international engagement with the world in the 21st century. For example, what values is America projecting through government institutions like the Export-Import Bank of the United States?

Right now, the U.S. Congress is considering reauthorization of the U.S. Export-Import Bank (“EXIM”) which expires in September 2019. EXIM’s mission is to support “American jobs by facilitating the export of U.S. goods and services.” Before reauthorizing EXIM, we must make sure that it reflects the values of America. Just as the “four freedoms” guided U.S. international engagement during WWII, it’s time we set out better principles for EXIM’s investments abroad, to make sure the face of America represented by the projects is what most Americans would support. 

And right now, what is missing from EXIM are principles to ensure that any projects financed offer freedom from environmental harm and freedom from fossil fuels. At a time we’re facing rising impacts from climate change and warnings from leading scientists that worse is on the way, such principles must be adopted, and now. The EXIM Bank must support development projects that not only create jobs and economic growth, but also protect people from further damage to our health and climate..

Freedom from environmental harm

Right now, projects under EXIM do not need to comply with the US National Environmental Policy Act. EXIM only provides a cursory opportunity to provide public input on what it finances, with no obligation to take action. NEPA’s role is to ensure that the federal government understands the environmental consequences of actions and ensure that the public has a voice in decisions. 

For American projects overseas, we should be holding all projects to a similar standard, and not providing taxpayer money and the full faith and credit of the US government to projects that cause the type of environmental harm overseas that would never be allowed in the US. EXIM should not be reauthorized without an obligation to comply with NEPA.

Freedom from Fossil Fuels

If EXIM gets reauthorized without improved guidance from Congress, it could end up financing several fossil fuel projects, such as ExxonMobil’s gas project in Mozambique. The Special Report on 1.5 degrees Celsius from the Intergovernmental Panel on Climate Change already made clear that the world needs to start rapidly phasing down the use of fossil fuels to avoid the worst impacts of climate change. And a scientific analysis in Nature this week showed that just operating existing fossil fuel infrastructure will lead to global temperatures exceeding the 1.5 degree Celsius threshold, unless fossil fuel phaseout measures are taken immediately. 

Given the hundreds of billions of dollars in economic losses from climate change-related disasters that the US is already suffering, it is reckless and short-sighted for EXIM to finance fossil fuel-related infrastructure. EXIM should not be authorized until there is clear language excluding the financing of coal-, oil-, and gas-fired power plants, and excluding financing for fossil fuel exploration, transportation and production. 

Today, more Americans work in clean energy jobs than in fossil fuels. If we really want to export the best that America has to offer, we must prioritize exporting our technology and expertise in wind power, solar, energy efficiency, storage and other non-fossil options.

The role of EXIM is to support the long-term well-being of America, and to export U.S. goods and services that generate American jobs. At times when these two goals are put into conflict, Congress needs to make clear that the priority is the long-term health and safety of all Americans and freedom from more climate disasters, not funding dirty projects overseas that would not be acceptable on America soil. EXIM must set standards for overseas investment in line with what we find acceptable in America. 

Just as EXIM cannot support projects that violate U.S. sanctions against Russia, or projects that would violate the Foreign Corrupt Practices Act, it’s time for Congress to set practical standards for the type of energy projects EXIM is allowed to fund. Since the Bank is “backed by the full faith and credit of the United States, EXIM assumes credit and country risks that the private sector is unable or unwilling to accept.”

EXIM reauthorization should not be held hostage by those who want to provide government subsidies for fossil fuel projects.

EXIM should not provide a blank check from the government to finance fossil fuel projects abroad. At a time we are seeing the growing costs and increasing impacts from climate change—in the form of damages from wildfires, hurricanes, floods and other disasters—the US must make certain that EXIM is not a key contributor to making climate change worse. Today, as we confront a climate crisis worsening before our eyes , it’s time to seriously discuss when we will achieve freedom from fossil fuels and rely on clean sources of energy to power and protect our future.  

About the Authors

Han Chen

Manager, Energy Policy, International Program

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