Petrochemical plant wins U.S. loan despite political pushback
(WO) 鈥 The U.S. Export-Import Bank authorized a听$690 million听loan to help build a petrochemical plant in Malaysia, despite objections from climate activists who say the project flouts Biden-Harris administration听promises听to halt financing for fossil fuel projects abroad.
The loan approved Thursday and听disclosed Friday听comes amid intensifying scrutiny of how independent U.S. agencies are addressing climate change following decisions that run counter to President Joe Biden鈥檚 environmental agenda. In 2021 Biden issued an听executive order听vowing to听curb public funding听of climate-damaging ventures and the U.S. signed a听pledge听with 33 other nations committing to halt such support.听
That hasn鈥檛 deterred the ex-im bank, an independent agency intended to bolster U.S. exports and, by extension, U.S. jobs.听With Thursday鈥檚 approval, the bank has backed some $2.2 billion in new oil-, gas- and coal-related projects overseas since May 2023.听
鈥淓x-im鈥檚 balance sheet tilts toward fossil investments rather than the clean energy sectors that are key to advancing both our climate and trade interests,鈥 environmental groups said in a听letter听to U.S. Treasury Secretary Janet Yellen and the bank鈥檚 chair, Reta Jo Lewis, prior to the board meeting. The bank鈥檚 continued support for fossil projects and delays advancing new policies to restrict that support 鈥渉ave undermined broader U.S. credibility鈥 on the issue, the groups argued.
The U.S. and other wealthy nations are struggling to agree on a broad plan for restricting such foreign fossil fuel finance.
The听Pengerang Energy Complex听in Malaysia is meant to be part of a major oil, gas and petrochemical hub near major international shipping lanes with deep water that can be navigated by the world鈥檚 largest crude carriers. Chevron Corp., Equinor Asa and Thai national oil company PTT PCL are among firms with supply and offtake agreements for the plant.
The prime U.S. beneficiary identified by the bank is Honeywell UOP, which is doing engineering and design work on the project.听
The facility is set to have the capacity to produce听6.5 million metric tons听per year of aromatic petrochemicals and oil products. According to a听regulatory notice听ahead of the board vote, the support will enable the facility to produce 725,000 metric tons per year of jet fuel, 894,000 metric tons per year of light naphtha and 432,000 metric tons per year of low sulfur fuel oil, among other products.
Honeywell technology applied to the project is intended to produce 30% fewer carbon dioxide emissions when the facility is operational, the ex-im bank听said听in a release, without immediately providing further details.
鈥淲ith this vote, ex-im continues to fulfill its mission to support the American exporter and increase their global competitiveness while ensuring a safe and secure supply chain,鈥 Lewis said. 鈥淭his transaction reinforces the United States鈥 and Malaysia鈥檚 commitment to decarbonize the global economy鈥 while at the same time 鈥渃ontinuing to diversify global energy sources and supporting energy security.鈥
Separately, the bank is moving closer to approving a $646 million loan to help Guyana develop a natural gas project, and it just听authorized听$297 million in support for upgrades at a听gas-fired power plant听in Iraq.
Democratic lawmakers听have admonished听the bank that it has latitude to reject projects based on environmental concerns. And environmental activists have called on Biden to use his power under the bank鈥檚 charter to instruct application denials citing the national interest.听
鈥淭his is where the rubber meets the road,鈥 said Erich Pica, president of the advocacy group Friends of the Earth. 鈥淚f President Biden鈥檚 climate commitments are to be taken seriously, his administration must take immediate, meaningful steps that stop ex-im from supporting polluting industries.鈥
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