U.S. Export-Import Bank Subsidizing Dirty Coal and Dirtier Politics in India
After the U.S. Export-Import Bank (Ex-Im) invested your hard earned tax dollars in two of the world’s largest and most polluting coal plants, we wrote an open letter urging Ex-Im to halt its fossil fuel binge.
Now, new coal projects are creating a financial crisis in Asia due to skyrocketing coal prices, community opposition, and looming defaults. In fact, the Indian central bank has recommended local banks steer clear of these risky loans. While Indian Banks are listening, Ex-Im missed the memo. The bank is recklessly considering financing not one, but two risky coal projects in India with your tax dollars.
To understand just how poor of a decision this would be it is important to know the financial situation surrounding coal loans in India today. The situation has become so dire that two of the world’s largest coal plants face bankruptcy due to rising coal prices, forcing the companies to request a bailout from the Indian government.
Now Indian financial institutions will no longer touch coal loans, fearing a systemic risk of default, and the Indian coal minister has even recommended freezing the pipeline of new coal power projects. Meanwhile, lenders are ramping up investments in clean energy, as a more reliable way to meet India’s power needs.
And it’s not just the financial risks that make Ex-Im’s continued interest in dirty coal deplorable. Local communities in India are rising up to protest forced removals and the environmental, social, and economic degradation that come with massive coal projects. Villagers are literally putting their lives on the line as they struggle to protect their homes and livelihoods from new coal development in deadly clashes that have been compared to war zones.
How do we know the situation on the ground is this bad? Because this is not Ex-Im’s first venture into Indian coal projects. In 2010, the bank awarded over $900 million in U.S. taxpayer financing for Reliance Power’s 4,000 MW Sasan coal-fired power plant in Singrauli, India (the size of 8 average US coal plants).
After strongly opposing this risky loan, the Sierra Club visited Singrauli, to see for ourselves what harm Ex-Im’s lack of accountability was causing. We heard stories from a villager whose friend protested the plant and “disappeared” after his home was bulldozed.
Now Ex-Im is looking to deepen its dirty coal relationships, with an even dirtier relationship with Reliance Power by putting U.S. taxpayer dollars on the line to finance two additional coal projects, 4,000 MW Chitrangi (near the Sasan project) and 4,000 MW Tilaiya in Jharkhand.
Rejecting new fossil fuel projects, especially coal projects, should be a no-brainer for Ex-Im. The resources could be far better spent supporting clean energy exports – something Ex-Im has shown it can do. In fact Ex-Im has a Congressional mandate to direct 10% of its energy financing towards clean energy. Government Accountability Office figures show that renewables made up less than 2% of the bank’s portfolio, illustrating that Ex-Im has no vision, no commitment to clean energy, and no accountability.
But the American public has a way to hold Ex-Im accountable. Currently, Congress is considering whether to reauthorize Ex-Im or eliminate the bank all together. Ex-Im has shown that it can successfully partner with clean energy, but it continues to undermine these efforts by supporting dirty risky and devastating coal projects. It’s time Ex-Im Bank got the news that the rest of the Indian banking industry already knows.
-- Co-written by Nicole Ghio and Chelsea Judy