This post was co-written by Justin Guay of the Sierra Club International Program.
The Sierra Club, Friends of the Earth, Pacific Environment, Jubilee USA, groundWork South Africa and dozens of activists joined forces today to protest proposed Export-Import Bank’s financing of the enormously destructive Kusile coal fired power plant in South Africa (see photos here). Kusile is a disastrous project that represents the latest in a growing Export-Import Bank trend (PDF) to push fuels of the past on economies of the future.
(The Export-Import Bank of the United States “is the official export credit agency of the United States. Ex-Im Bank’s mission is to assist in financing the export of U.S. goods and services to international markets.”)
Just this week, in an appearance at the Center for International and Strategic Studies, Export-Import Bank President Fred Hochberg continued to trumpet the Bank’s efforts “to increase the global footprint of key domestic industries in which U.S. exporters have a comparative advantage, such as renewable energy.” While the environmental community greatly wishes this rhetoric were true, the reality falls painfully short.
The truth is that, according to a recent U.S. Government Accountability Office study, the Ex Im Bank has continued to fall miserably short of congressional directives to increase renewable energy lending to 10% of its overall portfolio. From 2003-2010 the Ex Im Bank spent a meager 0.23% of its total portfolio on clean technologies – or roughly $32.5 million annually. If it were to achieve its congressionally mandated target it would finance roughly $2 billion in annual exports that would create on average 3-4 times more jobs than investments in dirty, outdated fossil fuel technologies.
While these much needed investments in the environment, job creation, and American competitiveness have been woefully neglected, the Bank has been busy ramping up lending for massive, destructive, and dirty coal fired power plants.
To put it in perspective, from 2003-2010 the Ex Im Bank spent a grand total of $260 million financing clean technology exports. In a single loan in 2010 – the Sasan coal fired power plant in India – it spent $917 million to shackle India’s energy system, and American competitiveness to outdated technologies and fuels.
The most painful irony is that the coal industry is seeking new markets abroad because here in the U.S. its markets are drying up. As the Kevin Parker of Deutsche Bank recently put it: “Coal is a dead man walking. Banks won’t finance them. Insurance companies won’t insure them. The EPA is coming after them…and the economics to make it clean don’t work.”
The recognition that coal is incapable of powering the future is not unique to the American economy. According to a recent Harvard study (PDF), six rapidly emerging economies – Brazil, India, Russia, Mexico, China, South Africa – are out-investing all member countries of the International Energy Agency combined when it comes to energy innovation.
This represents a clear shift in the global energy landscape with key emerging economies leading the way in an emerging clean energy revolution – a monumental shift the Export-Import Bank fossil fuel financing is not preparing America for.
It is time the Bank listened and lived up to its rhetoric by rejecting the Kusile project and all it stands for. Doing so would represent a first, concrete step towards turning its rhetoric into reality.