US Ex-Im Bank Approves Funding For Massive Coal-Fired Plant in India
After bowing to political pressure to reverse its rejection of a huge coal-fired power project in India, the United States Export-Import Bank (Ex-Im Bank) voted on Wednesday to provide a "final commitment" and send the project to Congress for final review.
The move marks the last step before final approval of U.S. subsidies for one of the world's largest point sources of carbon dioxide emissions, and yet another strategic misstep for the global climate and the clean technology export sector in the United States.
The 3,960-megawatts (MW) Sasan project is one of nine "Ultra Mega Power Plants" (UMPP) being pursued by the Indian government. Each UMPP is roughly the equivalent of eight average U.S. coal fired power plants. Sasan alone will be responsible for 26 to 27 million tons of carbon dioxide annually--one fifth of all proposed coal fired power plants in the United States combined. With India averaging some of the highest transmission losses in the world of 25-40%, as well as facing an increasing need for imported coal, which leads to price instability for end users, many question the ability of these plants to deliver India's much needed boost in energy supplies.
Civil society groups have condemned Ex-Im Bank's reversal on Sasan. "The fix is in at Ex-Im Bank. The Bank's board bowed to political pressure and in so doing wastes public financing to worsen their fossil fuel binge" said Doug Norlen Policy Director for Pacific Environment.
Like many large scale projects Sasan requires government backed financing to reduce the risk the private market refuses to take on.
"The US government already lavishly subsidizes the coal industry with some $19 billion in tax breaks and other handouts," said Michelle Chan, Economic Policy Director for Friends of the Earth, which recently issued a subsidies report. "With this vote, Ex-Im Bank is choosing to dole out hundreds of millions more to dirty coal." The U.S. company set to profit from the deal, Bucyrus (Nasdaq: BUCY), took home hefty profits last year with $2.6 billion in revenue; and despite its jobs rhetoric, the company's 10-K states that it "recently finalized a joint venture with a local partner to expand our manufacturing capacity in China."
However, the support of Sasan is not an isolated incident. According to a recently released Government Accountability Office (GAO) report, more than 95% of Ex-Im's energy portfolio is based on fossil fuels, and in 2009 Ex-Im Bank financing for renewable energy was less than 0.5% of the agency's total financing. Yet, according to a recent study by the World Wildlife Fund, for every million dollars invested in energy projects, 13.5 jobs are created in the clean tech export sector, while only 3.7 and 4.9 jobs are created in the oil, gas and coal industries, respectively.
"Addressing climate change by developing and exporting tomorrow's clean energy technologies strengthens the US economy. Continuing to finance outdated technologies that destroy our environment also destroys our chances for clean energy job creation. It only serves to cripple our competitiveness in the long run" said John Coequyt, Director of International Programs at the Sierra Club.
The agency is now turning its sights on an even larger and more destructive project, the Kusile coal-fired power project in South Africa. The 4,800 MW project would be responsible for 36.8 million tons of carbon dioxide annually and would increase South African energy sector emissions by 12.8% and the country's total contribution to climate change by 9.7%.
US citizens have already submitted nearly 7,500 public comments in opposition to the US government's contribution to this dirty project and its environmental impacts. The US Ex-Im Bank Board is expected to take up a due diligence vote on Kusile in early September. With the agency's reversal on Sasan, and the sheer scale of the Kusile project in the pipeline, it is likely to be a pitched battle.
"These public financing decisions will literally determine our future. We can either help lead the world in a clean energy economy, or deepen the climate change crisis we are already in," said Norlen.