Renewable Energy Funding Controversy

As both public and private financing pours into Renewable Energy projects throughout the world, a U.S. agency has been accused of failing to do its part.

Washington, D.C. – November 8, 2002 [] The Export-Import Bank, an independent U.S. government agency charged with financing the export of U.S. goods and services and supporting U.S. jobs, said in September that they have substantially increased financing for Renewable Energy industries and projects. This statement comes on the heels of a report from the U.S. General Accounting Office (GAO) that asserted the Export-Import (Ex-Im) Bank had not adequately financed Renewable Energy projects, inconsistently reporting their funding efforts during the past decade. The GAO is the investigative arm of the U.S. Congress that monitors federal spending, seeking to improve the performance and accountability of federal programs and expenditures. Despite legislation passed in 1989 that requires the Ex-Im Bank to allocate at least five percent of their funds to Renewable Energy industries while providing annual information about their Renewable Energy funding efforts, the GAO found the bank’s efforts lacking. Of the US$28 billion the Ex-Im Bank provided in loans and guarantees for energy-related projects from 1990 to 2001, 93 percent was used to finance fossil fuel projects while just three percent went to Renewable Energy projects, according to the GAO report. The report concluded the Ex-Im Bank had inadequately reported on their Renewable Energy financing. Since 1990, in fact, the Ex-Im Bank has not consistently provided information to Congress about its Renewable Energy program and its 1995 and 1998 annual reports did not address Renewable Energy at all, according to the report. According to the GAO, Ex-Im Bank financed Renewable Energy projects totaling US$730 million from 1990 through 2001 accounting for about 3 percent of all energy projects financed. Almost 60 percent of these funds were provided in 1994, when two large geothermal projects were financed in the Philippines for nearly US$395 million. A response to the report from the Vice Chairman of Ex-Im Bank, Eduardo Aguirre included in the GAO draft report said global market conditions had driven Ex-Im Bank’s disproportionate funding of fossil fuel projects. “Given that Ex-Im Bank is market driven, it is not surprising that the number and volume of Renewable Energy projects receiving Ex-Im support lags behind the bank’s support for equipment related to fossil fuel projects,” Aguirre said. The Ex-Im Bank disputes the findings of the report, claiming they don’t receive due credit for their Renewable Energy funding, but the GAO is confident in the accuracy of their report. “Although the draft report made some reference to market limitations that impact Ex-Im Bank’s financing for Renewable Energy exports, the report does not adequately address those issues,” Aguirre said. The Ex-Im Bank agreed that a number of factors identified in the report are important to the bank’s energy sector financing trends, but also expressed the view that the report understates the bank’s support of Renewable Energy exports. That support has increased substantially in 2002 compared to the years covered in the GAO report, according to the Ex-Im Bank. In fiscal year 2002, the Ex-Im Bank has supported more than US$300 million of U.S. exports of environmentally beneficial goods and services related to Renewable Energy, clean air, clean water and land remediation. The Renewable Energy projects among the Ex-Im Bank’s 2002 funding include: -Solar Outdoor Lighting: A small business manufacturer and distributor in Palm City, Florida, will use an Ex-Im Bank medium-term guarantee to support the US$2.6 million sale of billboards and solar-powered outdoor lighting systems to Afromedia Nigeria in Lagos, Nigeria. -Encon Energy and Construction, a small business in Englewood, Colorado, is using an Ex-Im Bank medium-term guarantee to support the US$2.3 million sale of hydroelectric generators and engineering services to Turkey’s State Hydraulic Works for the Cine Dam and hydroelectric power project, located in the Aegean region of Turkey. North American Hydro in Neshkoro, Wisconsin, is a U.S. supplier on the transaction. -Southwest Windpower in Flagstaff, Arizona, Ex-Im Bank’s 2002 Small Business Exporter of the Year, has been using Ex-Im Bank’s environmental insurance policies for the past six years to sell its battery-charging wind generators in many developing markets, including Turkey, India, South Africa and St. Lucia. More than 50 percent of the company’s revenues come from export sales. AstroPower, in Newark, Delaware, is using Ex-Im Bank’s short-term environmental insurance policies to export its solar cells and modules to buyers in Mexico and Kenya.
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