July 21, 2015
As the Senate begins to consider the legislation to fund the Highway Trust Fund, there is a growing concern that a mechanism to reauthorize the Export-Import Bank charter will be attached to the bill. Because the Export-Import bank is used to provide hundreds of millions of dollars a year for unnecessary energy subsidies that distort the market and hurt consumers, The American Energy Alliance urges all Members to vote to oppose any amendment to reauthorize the Export-Import Bank.
In the energy sector, Ex-Im has been used by the Obama administration to advance its costly green energy agenda, which has been marked by questionable dealings and spectacular failures. In one instance, Ex-Im issued $455.7 million in loan guarantees to St. Clair Solar in order to purchase solar panels from First Solar without realizing that St. Clair owns First Solar. Some companies “double dip” in federal subsidies as well as Ex-Im financing: energy giants Gamesa, Areva, and Abengoa have all received billions of dollars from a combination of Ex-Im assistance and taxpayer subsidized Section 1603 grants.
The Ex-Im bank has been very aggressive with their subsidies for renewable energy exports to the tune of $257 million in FY 2013, $355.5 million in FY 2012, $721.4 million in FY 2011, $332 million in FY 2010, and $101 million in FY 2009.
Ex-Im has provided large subsidies for natural gas, solar, nuclear, and wind projects. In fact, Ex-Im doled out $19 billion for energy related projects between FY2007 and FY2014, 11 percent of all of Ex-Im subsidies over that time period.
One of the most notable failures of the Ex-Im bank came in the Solyndra debacle. Ex-Im approved a $10 million loan guarantee to a Belgian bank that financed the purchase of solar panels from Solyndra, a firm that went bankrupt after receiving a loan guarantee of more than $500 million from the Obama administration.
Further, the Ex-Im bank has been tied to Brazilian industrial magnate Marcelo Odebrecht, who was recently arrested on corruption charges. Diane Katz of The Heritage Foundation points out instances of Petrobas receiving Ex-Im handouts:
Ex-Im has been even more generous with Petrobras, which has a market cap of $61 billion and 2014 revenue of $143 billion. In 1998, for example, the Ex-Im board conferred “delegated authority” on Petrobras to issue up to $100 million in loan insurance and guarantees backed by the bank. Other deals include:
- January/May 2001: $44 million in financing for Petrobras to purchase a steam turbine and generator from General Electric for a power plant project. Four months later, the loan amount was increased to $97 million.
- October 2001: A $178 million loan to buy gas turbines and other equipment for a power plant project involving Petrobras and two other companies.
- May 2005: A $39 million loan guarantee for equipment to build an oil production platform for Petrobras off the coast of Brazil.
- 2009: A preliminary commitment of $2 billion to Petrobras as part of the bank’s “proactive outreach.” The financing was intended to develop offshore oil and gas reserves and upgrade its refining and distribution infrastructure. (This financing coincided with the Obama administration’s restrictions on offshore oil and gas projects.)
- February 2010: A $308 million loan guarantee to a Petrobras subsidiary for oil and gas field development. Bank records show $100 million is still outstanding.
- 2012: A $23 million loan guarantee to a Brazilian firm that will supply helicopter services to Petrobras for its deep-water drilling rigs.
While the Ex-Im bank was busy financing to the corruption-troubled Petrobas in Brazil, the Obama administration has made it more difficult for American oil companies to obtain offshore drilling permits in the U.S..
The American Energy Alliance urges Congress to oppose any amendment to reauthorize Ex-Im and will include it in our American Energy Scorecard. NO is the pro-taxpayer, pro-growth, and pro-energy vote.