Jun 17, 2015

The Ex-Im Bank’s Climate Of Corruption

Post by Freedom Partners

Arlington, VA — A number of environmental groups staged a protest outside of the Export-Import Bank this morning in opposition to the bank’s financing of a foreign coal project.

The Ex-Im Bank places restrictions on the financing of projects that don’t fall within the administration’s climate goals. President Obama and Chairman Fred Hochberg have come out in strong support of continuing these restrictions on traditional energy financing.

Freedom Partners Senior Policy Advisor Andy Koenig issued the following statement:

“Today’s protest offers another clear example of how the Ex-Im Bank is designed to pick winners and losers and exactly why it should be allowed to expire. The bank’s charter explicitly mandates that Ex-Im put certain energy interests ahead of free-and-fair competition in the energy sector. American tax dollars shouldn’t be used to further any administration’s political agenda, and the fact that it’s been doing so is just another reason the bank should be taken out of the equation altogether.”

The Ex-Im Bank’s Green Energy Mandate

The Ex-Im Bank Is Required To Provide “Not Less Than 10% Of Its Aggregate Authority” To Finance Renewable Energy. “The Bank should ‘promote the export of U.S. goods and services related to renewable energy sources.’ Since FY2008, appropriations language has specified the Bank should make available not less than 10% of its aggregate authority to finance renewable energy exports. The specific language used for the 10% target has varied; FY2015 appropriations language refers to ‘renewable energy technologies or energy efficiency technologies’ for the target.” (Shayerah Ilias Akhtar, “Export-Import Bank: Overview and Reauthorization Issues,” Congressional Research Service, 03/25/15)

In 2013, The Ex-Im Bank’s Board Of Directors Adopted A Revision To Its Environmental Procedures, “Aligning The Bank With President Obama’s Goal Of Reducing Carbon Pollution.” “The board of directors of the Export-Import Bank of the United States (Ex-Im Bank) today adopted revisions to its environmental procedures and guidelines governing high-carbon intensity projects, aligning the Bank with President Obama’s goal of reducing carbon pollution . . . [and requiring] carbon capture and storage in most countries in order to secure Bank financing for coal-fired power plants.” (Phil Cogan, “Export-Import Bank Board Adopts Revised Environmental Guidelines To Reduce Greenhouse Gas Emissions,” Export-Import Bank of the United States, 12/12/13)

The Obama Administration Is “Committed To Ending Government Financing For Most Coal-Fired Power Plants Overseas.” “The White House said on Friday it is committed to ending government financing for most coal-fired power plants overseas, a day after a bipartisan bill proposed overturning limits on coal-fired plant projects by the U.S. Export-Import Bank. . . . ‘We are also fully committed to ending public financing for the most polluting power plants overseas, except in the poorest countries, and oppose language that would hinder implementation of the president’s Climate Action Plan,’ [White House spokeswoman Jennifer] Friedman told Reuters.” (Roberta Rampton and Krista Hughes, “White House: Committed To Limits On Coal For Export-Import Bank,” Reuters, 03/20/15)

Chairman Fred Hochberg Supports President Obama’s Desire To Continue Restricting Ex-Im Financing For Traditional Energy. “Ex-Im Chairman Fred Hochberg said he was open to reforms as part of the reauthorization process. However, he added, he had reservations about one provision in a Senate bill, the only one of four proposals before Congress which has bipartisan support. The bill would overturn limits on financing coal-fired power projects, a policy the White House has said it plans to stick to. ‘I can’t agree with that part of the bill,’ Hochberg told Reuters. ‘The president is very clear. We should not use government resources except in the very poorest countries.’” (Krista Hughes, “U.S. Export-Import Bank Backers Say Ready For Fight ‘To The Death,’” Reuters, 04/24/15)

40% Of Respondents In The Bank’s Annual Competitiveness Report, Released Last Week, Said That This Coal Policy “Caused Exporters To Lose Coal Projects To Non-U.S. Exporters.” “Similarly, Ex-Im’s Supplemental Guidelines for High Carbon Intensity Projects were identified as having a potentially negative impact on exporters; with two out of five respondents stating that it had a negative impact on their exports and that the carbon policy caused exporters to lose coal projects to non- U.S. exporters.” (“Report to the U.S. Congress on Global Export Credit Competition,” Export-Import Bank of the United States, 06/01/15)

Ex-Im’s Green Cronyism

The Ex-Im Bank Provided A $10 Million Loan Guarantee To The Now-Bankrupt, Politically-Connected Solar Firm Solyndra. “The Export-Import Bank . . . puts its financial muscle behind politically connected firms . . . One of those chosen firms, incidentally, was Solyndra—the notorious and now-bankrupt company into which the U.S. government sunk more than $500 million of taxpayers’ money in subsidies and loan guarantees. According to the Ex-Im Bank’s 2011 Annual Report, Solyndra received a $10 million loan guarantee from Ex-Im, which financed a sale of Solyndra products to a customer in Belgium.” (Sallie James, “Expanding Ex-Im’s Mandate Is A Big Mistake,” Cato Institute, 03/14/12)

First Solar—A Major Corporate Donor To The Center For American Progress, Which Has Strong Ties To The Obama Administration—Received Millions Of Dollars From The Ex-Im Bank To Sell Solar Panels To Itself. “Ex-Im approved $455.7 million in loan guarantees to subsidize the sale of solar panels to . . . a small corporation called St. Clair Solar . . . a wholly owned subsidiary of First Solar. So, basically, First Solar was shipping its own solar panels from Ohio to a solar farm it owned in Canada, and the U.S. taxpayers were subsidizing this ‘export.’” (Timothy Carney, “Firm Sells Solar Panels To Itself,” Washington Examiner, 03/18/12)

The Ex-Im Bank Also Provided $9 Million In Subsidies To The Now-Bankrupt, Politically-Connected Solar Firm Abound Solar. (Maura Policelli, “Ex-Im Bank Announces $9.2 Million Loan To Support Abound Solar Inc. Exports,” Export-Import Bank of the United States, 07/18/11)

Abound Solar Went Bankrupt Shortly Thereafter, Leaving Hundreds Of Workers In Colorado Without A Job. “The once high-flying Abound Solar is under investigation by two separate governments . . . The company’s closure in March and its decision to declare bankruptcy in July left hundreds of people without jobs and a list of creditors spanning the globe, from Fort Collins and Loveland to Longmont, Germany and India.” (Trevor Hughes, “Bankruptcy, Investigations Mark Disappointing End To Abound Solar,” The Coloradoan, 10/10/12)

Abound Solar Left Thousands Of Gallons Of Toxic Waste Pooling Across The State. “After the bankruptcy, state inspectors found 2,000 pallets of panels in Denver and Longmont warehouses, and [4,100] gallons of cadmium waste in Fort Collins and Longmont facilities.” (Mark Jaffe, “Bankrupt Abound Solar’s Toxic Wastes Cleaned At 4 Colorado Facilities,” Denver Post, 07/08/13)

The Ex-Im Bank Should Have Seen This Coming. “Abound [Solar] faced significant financial challenges beginning in 2010, as evidenced by a net loss from operations of $73.8 million in 2010 and $50.6 million in 2011. The company announced a restructuring in 2011 and laid off 70 percent of its work force. As the company’s credit position continued to decline in 2011, the Department of Energy froze its $400 million credit facility to Abound.” (Mark Thorum, “Report On Punj Lloyd Solar Power, Ltd.,” Office of Inspector General, 09/24/14)

Pat Stryker, A Major Democratic Campaign Bundler, Was A Key Investor In Abound Solar. “The Abound investor is billionaire heiress Pat Stryker . . . donated $50,000 for Obama’s inauguration, according to the Center or Responsive Politics and bundled $87,500 for that inauguration, according to a bundler list released by the Obama campaign in 2009. She gave $35,800 to the 2012 Obama Victory Fund earlier this year.” (Keenan Steiner, “Another Renewable Energy Loan Recipient Hires Lobbyists, Has Fundraising Ties To Obama,” Sunlight Foundation, 11/30/11)

The Ex-Im Bank Subsidized The Sale Of A German Company’s Wind Turbines To A Wind Farm In Peru . . . After The Sale Was Already Made. “Siemens exported three dozen wind turbines to two Peruvian wind farms in 2014, and the U.S. Export-Import Bank provided $65 million in taxpayer financing, because all of the blades and some of the nacelles (the gear mechanisms inside the towers) were manufactured in the U.S. . . . Here’s the thing: Siemens had already completed the sale to both wind farms, months before Ex-Im approved the loan. In fact, one of the two wind farms was completed and generating electricity before Ex-Im’s August 2014 approval of the loan. The other wind farm was under construction, and the contract on that Siemens sale had been signed months earlier.” (Timothy Carney, “Export-Import Bank’s ‘Deal Of The Year’ Subsidized A Sale That Had Already Been Made,” Washington Examiner, 04/24/15)

The Ex-Im Bank Propped Up Enron With Hundreds Of Millions Of Dollars In Subsidies. “The Export-Import Bank of the United States . . . lent $675 million to companies affiliated with Enron, starting in 1993.” (Richard Stevenson, “Enron Received Many Loans From U.S. For Foreign Projects During The 1990s,” New York Times, 02/21/02)

The Kicker: These Companies Didn’t Need The Help

The Ex-Im Bank Subsidizes Green Energy Corporations That Have Already Benefited From Billions Of Dollars In Combined Subsidies. “Many of the green firms that receive Ex-Im benefits have enjoyed benefits from a number of other federal programs. . . . The [third] chart shows that large corporations often double-dip into multiple federal programs at a time. . . . [A few examples: the] Spanish wind energy giant Gamesa, which received a combined $1.3 billion; French nuclear conglomerate Areva, which received $2.1 billion through the 1703 program and the Export-Import Bank; and the Spanish energy corporation energy Abengoa, which received a combined total of $3 billion in federal assistance.” (Veronique de Rugy, “The Export-Import Bank’s Green Portfolio Benefits Familiar Firms,” Mercatus Center, 05/19/14)

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