Protesters in raincoats hold yellow signs calling for an end to fossil fuels.

Protesters call on President Joe Biden and Wall Street to phase out fossil fuels.

(Photo: Spencer Platt/Getty Images)

'A Huge Step Backward': US Export-Import Bank Approves Estonian Fossil Fuel Project

The approval comes as the nation has signed off on $1.5 billion for overseas oil and gas projects so far this year, even though it pledged to stop doing so by the end of 2022.

Despite President Joe Biden's commitment to end investments in overseas fossil fuel projects, the U.S. Export-Import Bank on Thursday agreed to fund the Liwathon oil tank project in Estonia.

The decision comes on top of the $1.5 billion that the U.S. has already promised to overseas oil and gas developments in 2023, in violation of a 2022 deadline to end international fossil finance.

"President Biden cannot claim climate wins while his U.S. Export-Import Bank is propping up a pollutive industry," Kate DeAngelis, senior international finance program manager for Friends of the Earth U.S., said in a statement. "EXIM spent the hottest months in history approving four major fossil fuel projects, demonstrating its disregard for the planet and all living beings. An institution that chooses polluters over people should not be trusted to follow President Biden's climate commitments."

"Biden and the United States risk becoming an international embarrassment with these retrograde approvals."

Biden signed an executive order in 2021 in which he promised to develop a climate finance plan that would promote "the flow of capital toward climate-aligned investments and away from high-carbon investments." Then, at the COP26 U.N. climate conference in Glasgow, Scotland, the U.S. joined 24 other countries and five financial institutions in pledging to stop funding "unabated fossil fuel energy" overseas by 2022.

Despite this, Oil Change International found in a September report that the U.S. had approved more money for international fossil fuel projects in 2023 than any other nation that agreed to stop.

"EXIM's decision to approve the Liwathon oil project is yet another concerning step in the wrong direction for climate action," Collin Rees, U.S. program manager at Oil Change International, said in a statement, calling the approval "yet another setback for President Joe Biden's climate commitments."

"Despite lofty promises and international agreements, Biden continues to approve projects that exacerbate our climate crisis and threaten communities," Rees continued. "As many other G-20 countries implement their commitment to end public finance for fossil fuels, Biden and the United States risk becoming an international embarrassment with these retrograde approvals."

In addition to the Liwathon approval, the EXIM specifically has already signed off on almost $100 million for an oil refinery in Indonesia, $240 million for an Iraqi gas development, and $400 million for Trafigura to support U.S. exports of liquefied natural gas (LNG), Friends of the Earth said. The bank is also weighing whether to fund Papua LNG in Papua New Guinea and oil and gas projects in Bahrain and Guyana.

Both the International Energy Agency and the Intergovernmental Panel on Climate Change have concluded that no new oil, gas, and coal developments are compatible with limiting global heating to 1.5°C above preindustrial levels. At the same time, Nina Pusic, export finance climate strategist at Oil Change International, argued that fossil finance goes against economic as well as scientific sense.

"Ultimately, using American taxpayer dollars to finance oil and gas infrastructure is not only an irresponsible use of public money from a climate perspective, but also risks creating stranded assets, as many regions of the world quickly transition to cleaner energy sources," Pusic said in a statement.

However, it's not too late to reverse course.

"The U.S. can help lead a shift of billions of dollars from last century's dirty energy into the clean, renewable energy of the future," Rees said, "but approvals like Liwathon are a huge step backward."

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