OPIC and the Export-Import Bank After the NEPA Settlement: A Tale of Two Agencies
In early 2009 two US agencies, the Overseas Private Investment Corporation (OPIC) and the Export-Import Bank (Ex-Im), settled a longstanding climate change lawsuit in the 9th Circuit and pledged to reduce emissions in their lending portfolios while increasing support for clean energy. Their approaches to implementing the settlement agreement are taking starkly different paths: OPIC appears to have entered the “age of wisdom,” while Ex-Im remains in the “age of foolishness,” to borrow from Charles Dickens.
In 2002, the city of Boulder, Colorado and the California cities of Oakland, Santa Monica, and Arcata, along with members of Greenpeace and Friends of the Earth, filed a groundbreaking climate change lawsuit (Friends of the Earth, Inc. et al v. Spenelli et al).
The lawsuit alleged that Ex-Im and OPIC violated the National Environmental Policy Act by providing over $32 billion in financing and political risk insurance to greenhouse gas (GHG) intensive fossil fuel projects around the world, without full consideration of their contribution to climate change. From a legal standpoint, the 9th Circuit decision that the plaintiffs had standing provided an important precedent for later climate related legal actions.
The NEPA case dragged on for several years and, once the Obama Administration came into office, it was finally settled with OPIC and Ex-Im both promising to develop new carbon policies and enhance their support for clean energy technologies. For any investment facility, public or private, a solid policy framework involves reducing emissions while increasing investment in clean energy as feasible. Indeed the recent Executive Order from President Obama signals that all federal agencies must move in this direction. Presumably, this includes OPIC and Ex-Im. Further, the G-20 pledge to phase out inefficient fossil fuel subsidies would suggest that OPIC and Ex-Im have obligations in this policy realm as well. However, upon closer review, it is evident that OPIC and Ex-Im are moving in starkly different directions from one another, with Ex-Im putting current Administration policy direction and the spirit of the NEPA case settlement in jeopardy.
OPIC announced a new Greenhouse Gas Initiative, “establishing an annual emissions cap for all new GHG emissions in OPIC supported projects to which the agency provides a commitment. The cap will be equivalent to the emissions from projects committed to by OPIC in fiscal year 2007. If met, the goal will result in a reduction in emissions from 54.7 million tons of CO2eq in OPIC’s current portfolio of OPIC supported projects, to a cap of 44 million tons in 2016.” In addition to the new GHG Initiative, OPIC has begun an aggressive investment focus on renewable energy and efficiency. In the past few years, OPIC has invested over $700 million in low carbon investment funds with companies like Good Energies and the Virgin Green Fund. Between the new GHG Initiative and more aggressive investment focus, OPIC’s GHG emissions are capped and will go down, while positive investments in clean energy are skyrocketing. It’s a great story that the Obama Administration should let people know more about. OPIC is quietly going about its business, turning a healthy profit for US taxpayers, leveraging private sector capital, and mitigating climate change.
Ex-Im on the other hand, has continued on a business as usual path, with record investment applications in GHG intensive projects this fiscal year. If approved, total Ex-Im investment this year will result in annual GHG emissions north of 30.096 million Tons/yr of CO2, according to figures provided by leading environmental organizations. The agency put on a press blitz this week announcing a “new” carbon policy. However, in reality, the “new” is old, generally codifying existing GHG accounting policies in place since 1998 that simply count emissions without any commitment to real reductions. Ex-Im also pledges a $250 million renewable energy facility (less than 2 percent of their overall financing portfolio), yet has created similar facilities in the past while actually distributing very few dollars to projects. Direction from Congress through Ex-Im’s current appropriations bill calls for “not less than 10 percent” of agency resources to go towards renewable and efficiency technologies.
The Chair of the White House Council on Environmental Quality, Nancy Sutley, provided a guarded review of Ex-Im’s carbon policy, stating CEQ’s intent to work closely with Ex-Im on implementation, enhanced transparency, and environmental stewardship. CEQ stopped short of endorsing Ex-Im’s endeavor. It remains to be seen if the Ex-Im initiative will fulfill the goals laid out by President Obama and indeed the citizens who originally filed suit against this government agency. As with Dickens, it remains to be seen if Ex-Im is in the spring of hope or despair.
