(Bloomberg) -- The US Export-Import Bank authorized a $690 million loan to help help build a petrochemical plant in Malaysia, despite objections from climate activists who say the project flouts Biden-Harris administration promises to halt financing for fossil fuel projects abroad.
The loan approved Thursday and disclosed Friday comes amid intensifying scrutiny of how independent US agencies are addressing climate change following decisions that run counter to President Joe Biden’s environmental agenda. In 2021 Biden issued an executive order vowing to curb public funding of climate-damaging ventures and the US signed a pledge with 33 other nations committing to halt such support.
That hasn’t deterred the ex-im bank, an independent agency intended to bolster US exports and, by extension, US jobs. With Thursday’s approval, the bank has backed some $2.2 billion in new oil-, gas- and coal-related projects overseas since May 2023.
“Ex-im’s balance sheet tilts toward fossil investments rather than the clean energy sectors that are key to advancing both our climate and trade interests,” environmental groups said in a letter to US Treasury Secretary Janet Yellen and the bank’s chair, Reta Jo Lewis, prior to the board meeting. The bank’s continued support for fossil projects and delays advancing new policies to restrict that support “have undermined broader US credibility” on the issue, the groups argued.
The US and other wealthy nations are struggling to agree on a broad plan for restricting such foreign fossil fuel finance.
Read: Rich Nations Running Out of Time to Curb Oil and Gas Funding
The Pengerang Energy Complex 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’s largest crude carriers. Chevron Corp. and Equinor Asa and Thai national oil company PTT PCL are among firms with supply and offtake agreements for the plant.
The prime US beneficiary identified by the bank is Honeywell UOP, which is doing engineering and design work on the project.
The facility is set to have the capacity to produce 6.5 million metric tons per year of aromatic petrochemicals and oil products. According to a regulatory notice 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 said in a release, without immediately providing further details.
“With 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,” Lewis said. “This transaction reinforces the United States’ and Malaysia’s commitment to decarbonize the global economy” while at the same time “continuing to diversify global energy sources and supporting energy security.”
Separately, the bank is moving closer to approving a $646 million loan to help Guyana develop a natural gas project, and it just authorized $297 million in support for upgrades at a gas-fired power plant in Iraq.
Democratic lawmakers have admonished 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’s charter to instruct application denials citing the national interest.
“This is where the rubber meets the road,” said Erich Pica, president of the advocacy group Friends of the Earth. “If President Biden’s climate commitments are to be taken seriously, his administration must take immediate, meaningful steps that stop ex-im from supporting polluting industries.”
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