The Worst Kind Of Government Waste: Promoting Climate Change

The Obama administration needs to take a closer look at the Ex-Im Bank’s activities.

I sometimes get into debates with my fellow progressives over whether we should ever talk about the idea of waste in government sending. Some of my friends argue that we shouldn’t because it only reinforces conservative talking points but my view is very different that that. I believe that most Americans feel very strongly that there is waste in government spending, that we will never talk them out of that idea, and that when we ignore the subject, we leave that fertile ground wide open to conservatives to define what waste is on their own terms.

Then there’s this: there is a lot of waste in government spending. It’s just a fact we should deal honestly with. But here’s where the conservatives get it all wrong: it is not wasteful to make sure a hungry 8 year old gets a school lunch; it isn’t wasteful for an 85 year old with no pension to have their $15,000 a year in Social Security keep up with inflation, or to get decent health care through Medicare; it isn’t wasteful to invest in the future by teaching our kids, helping students go to college, and building roads and bridges. What is wasteful in government spending is when we directly subsidize huge corporate interests: sweetheart contracting deals, lobbyist-designed special tax loopholes, and direct subsidies to big profitable companies.

Far worse than simple corporate subsidy waste, though, is when we hand out money to companies to do things that actively harm us. One of the worst examples of this right now is the federal government, through the Export-Import Bank, is directly subsidizing overseas carbon-vomiting coal production. Because Ex-Im is handing out money to extract coal in places like Australia, this doesn’t even create American jobs. Meanwhile, it is going to contribute dramatically to over-heating the planet even faster. It is an obscenity that our government is doing this.

The Export-Import Bank, which backs loans to boost US exports abroad, has financed a number of coal projects in the past few years. And this support is growing: Funding for fossil fuel projects has shot up from just under $3 million in fiscal year 2009 to $9.6 billion in 2012. Loans for renewable energy, meanwhile, have barely moved an inch.

This inconsistency between the administration’s stated goals and the reality of the Export-Import Bank’s actions should be alarming to taxpayers. The Bank should be helping American businesses export their goods abroad – not subsidizing projects that hurt the environment and do almost nothing for American workers.

Here are some of the more controversial projects the Bank has taken on in recent years:

Great Barrier Reef Fracking: The Ex-Im Bank has funded fracking in the Great Barrier Reef, one of the great natural wonders of our planet. The Bank committed $5 billion to two natural gas facilities located amidst an array of rare and protected marine species. A spectrum of environmental groups have filed suit against the bank for their financing of the project.

South Africa Coal-Fired Power Plant: In 2011, the Ex-Im Bank provided $805 million for the Kusile power plant in South Africa, one of the world’s largest coal-fired power plants. Before the loan was even made, hazardous pollutants in the area exceeded acceptable levels. Because of the potential environmental fallout, Ex-Im’s move was strongly opposed by civil society organizations in South Africa and abroad, as well as by US medical experts.

India Coal Plant: The Ex-Im Bank pledged $900 million in 2010 to the massive Sasan power plant in northern India. The Bank initially opposed the project for violating a federal carbon policy, but reversed its decision “due to pressure from the administration,” according to the Sierra Club. The project caused an outcry in the area after more than two dozen workers were killed when a smokestack collapsed and other residents were reportedly displaced to make way for the plant’s construction.

The good news is that environmental groups have taken notice and have filed not one, but two lawsuits in the hopes of blocking these kinds of loans.

The first, filed earlier this year, concerns a loan to XCoal Energy & Resources that would expand its mining operations in Appalachia and boost exports of coal abroad – the very same places, by the way, that President Obama has previously pledged to curtail coal production. A broad coalition of green groups, including the Sierra Club and Friends of the Earth, have sued the Bank for making the loan without proper environmental review.

As if that weren’t disturbing enough, the second lawsuit targets something I didn’t even think possible – fracking near Australia’s Great Barrier Reef. The Bank has apparently committed nearly $5 billion to support two natural gas facilities located beside the reef – a commitment made, once again, without scrutiny of the environmental costs.

In case it wasn’t clear, that’s $5 billion of your taxpayer dollars paying for the destruction of one of the greatest natural treasures on Earth. Such a project would be illegal in the United States under the Endangered Species Act, according to Sarah Uhlemann of the Center for Biological Diversity.

The Obama administration needs to take a closer look at the Ex-Im Bank’s activities. Their subsidies aren’t just harming foreign nations and natural habitats; they’re also doing damage to our businesses and workers here at home. Worst of all for the long run, they are actively contributing to the most destructive kind of climate change. The administration deserves a lot of credit for the good things they have on climate change regulation, but the Ex-Im bank’s subsidies for coal are in danger of wiping out much of the progress Obama has made.

About Mike Lux

Mike Lux's picture
Author, The Progressive Revolution: How the Best in America Came to Be

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