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U.S. backs Indonesian oil refinery despite climate
pledge
12
May
2023
By
Michael Copley
Biden pledged to stop funding fossil fuels overseas.
It's not stopping one agency
![](images/images_06_26_2023/gettyimages-1236294408_custom-fa849ce8043a383baf8ab844931c840583d2b3a0-s800-c85%20copy.jpg)
President Biden at
the United Nations' annual climate negotiations in Glasgow,
Scotland, in 2021. The U.S. and other countries pledged that year
to stop funding overseas fossil-fuel projects that freely emit
greenhouse gas pollution.
BRENDAN SMIALOWSKI/AFP via Getty
Images
In 2021, the Biden administration told federal
agencies to stop funding many new fossil fuel projects abroad. The
directive went out shortly after a United Nations climate change
summit in Glasgow, Scotland, where the United States and other
countries pledged to cut off public support for overseas fossil fuel
projects that freely emit greenhouse gas pollution. But now, leaders
of America's Export-Import Bank have decided to lend nearly $100
million for the expansion of an oil refinery in Indonesia.
At a closed-door meeting Thursday, the bank's board of directors voted
to back a project that will help Indonesia's national oil company
increase production at its Balikpapan refinery.
Friends of the Earth, an environmental group, says the funding
"directly violates" commitments the Biden administration made to end
federal support for fossil-fuel projects in other countries.
"If we have this free-wheeling agent, then they're not answerable to
the people, and they're basically using U.S. taxpayer dollars without
any consequence or oversight," says Kate DeAngelis, who works on
international finance at Friends of the Earth. "And that seems like it
shouldn't be allowed within the U.S. government."
Shruti Shukla, who works on energy issues at the Natural Resources
Defense Council, says the funding also runs counter to international
efforts to reduce Indonesia's greenhouse gas emissions. Investors and
a group of wealthy countries, including the U.S., have agreed to
provide Indonesia with billions of dollars in grants and loans to help
it get off coal power.
"It's time, at this stage, to pick and choose winners from a climate
standpoint," Shukla says. "And it would be timely, especially for
export credit agencies like the [Export-Import Bank], to use their
financing dollars for the most climate-positive projects that are
available."
The Export-Import Bank declined to comment on the record. The bank is
an independent government agency that provides loans and insurance for
projects that can boost U.S. exports.
"This project would support hundreds of U.S. jobs at dozens of
manufacturers across the country, and allow Indonesia to substantially
reduce its reliance on imported, refined transportation fuels while
upgrading to a cleaner standard, protecting human health and the
environment in the process," Reta Jo Lewis, chair of the Export-Import
Bank, said in a news release.
Those sorts of local health and environmental benefits are important,
Shukla says. However, if the project increases Indonesia's fossil fuel
supplies, then she says it undermines the country's climate plans.
"What is concerning is that it gives a signal to other oil and gas
projects in the region that they can still find financing from
institutions like the [Export-Import Bank] for any future expansions
that they might have in mind," Shukla says. "So that, to me, is the
wrong signal to send out at this moment in time."
For the fiscal year that ended on September 30, 2022, oil and gas
projects accounted for about 27% of the bank's portfolio, second only
to the aircraft industry. The agency is considering financing more
fossil fuel projects around the world, including the development of
oil and gas fields in Mexico and Bahrain.
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