US Export Credit Agency Approves Loan Guarantee for Bahrain Oil Project
Approval of $500 Million Loan Guarantee for Oil and Gas Project in Bahrain
The U.S. export credit agency recently voted to approve a $500 million loan guarantee for an oil and gas drilling project in Bahrain, raising questions about the U.S. climate pledge to reduce support for fossil fuel projects.
EXIM Board’s Decision Despite Climate Pledge Concerns
Despite concerns raised by Democratic lawmakers and environmental activists, the board of directors at the Export-Import Bank of the United States (EXIM) decided to support the expansion of an oil and gas field in Bahrain, which includes over 400 new oil wells and 30 gas wells.
Project’s Environmental Measures
While the loan to Bapco Energies contradicts the Biden administration’s commitment to stop funding fossil fuel projects overseas, EXIM highlighted that the project includes initiatives to reduce greenhouse gas emissions. Bapco had also committed to achieving net-zero operations by 2050 and ending routine flaring by 2030.
Support for U.S. Jobs and Climate Goals
EXIM President Reta Jo Lewis emphasized that the loan would create U.S. jobs and help Bapco Energies achieve its climate goals through enhanced grid interconnectivity, efficiency improvements, decarbonization efforts, and investments in large-scale solar projects.
Concerns Raised by Democratic Lawmakers
In a letter to EXIM’s board members, Democratic lawmakers, led by U.S. Senator Jeff Merkley, urged the agency to reject the loan guarantee, emphasizing the need to consider the environmental impacts of such projects seriously.
Global Pledge vs. Actual Approvals
Despite the U.S. joining a pledge with other countries to end public financing of fossil fuel projects overseas at the COP26 climate conference, the approval of eight fossil fuel projects totaling over $2 billion by U.S. export agencies has raised concerns.
Ongoing Debate and Future Projects
An environmental group has lodged a complaint with the Organisation for Economic Co-operation and Development over EXIM’s oil and gas financing deals. The agency is also considering support for fossil fuel projects in Papua New Guinea and Guyana, with decisions expected later this year.
