Even as the Biden administration, under pressure from environmentalists, stops approving a major natural gas export terminal in the United States, it faces another major gas decision overseas.
A $13 billion natural gas export project in Papua New Guinea led by TotalEnergies and Exxon Mobil is on a short list of projects to receive financing from the U.S. Export-Import Bank, or Ex-Im, which supports U.S. businesses in Worldwide.
The Papua LNG project will join a portfolio of oil and gas projects financed by the bank, including an oil refinery in Indonesia and an oil reservoir project in the Bahamas. The bank is also looking at financing an offshore pipeline and gas stations in Guyana.
Some climate activists see a large contradiction between the climate actions taken by the government in the United States versus around the world.
“He’s done so much at home,” said Kate DeAngelis, who works in international finance at Friends of the Earth, a network of environmental groups that called on the bank not to fund the project, referring to President Biden.
But “he can’t claim to be a climate champion when the U.S. is supporting this fossil fuel infrastructure around the world,” he said.
Between 2017 and 2021, the Ex-Im Bank, whose board is made up of political appointees, provided nearly $6 billion in financing for fossil fuel projects and $120 million for clean energy, according to a tally by Perspectives Climate Group and the nonprofit Oxfam group. .
A senior former official told The Times that while the bank “seeks to align itself with the government’s climate agenda”, it must comply with statutory requirements, including a “prohibition against discrimination based solely on industry, sector or business ». The bank’s ultimate mission, the official added, was “to support US jobs.”
The Papua gas project has been particularly controversial. It promises to bring wealth in one of the world’s poorest nations and strongly supported by the local government. Its operators seek to supply Asian nations with natural gas in order to move away from coal, the dirtiest fossil fuel and a major driver of climate change.
The natural gas project “will contribute to the security of LNG supply, especially for customers in Asia, where LNG can replace coal for electricity generation and participate in a significant reduction of CO2 emissions in the region,” said Julien Pouget, Vice President of TotalEnergies. he said last year. LNG stands for liquefied natural gas.
Whether gas is displacing coal, rather than simply adding new capacity or crowding out renewables like wind and solar, varies widely by country. Environmental groups point to research that increasingly casts doubt on the climate benefits of switching to natural gas. And liquefying natural gas for transport on ocean tankers is energy intensive.
For Papua New Guinea, a largely agricultural nation of about 10 million people, the jump in emissions would be huge. The project itself, the nation’s second liquefied natural gas project, will add more than 7 percent to energy and industry emissions, according to an analysis by the Institute for Energy Economics and Financial Analysis, a think tank that has been critical of the project.
TotalEnergies said in a statement that it was “fully committed to reducing the project’s footprint to the absolute minimum.” The project, for example, plans to power natural gas processing with gas and steam turbines, as well as solar power, according to the company.
Local environmental groups have warned that the project, to be built in a remote area of the country with little previous oil and gas mining or development, will be harmful to biodiversity.
A previous gas project, led by Exxon and backed by Ex-Im, was mired in allegations of environmental destruction and human rights abuses. Papua New Guinea is already one of the most vulnerable countries in the world to natural hazards such as coastal erosion, landslides, floods and droughts.
“We have very serious concerns about what this project will mean for local communities, the climate and nature,” said Peter Bosip, executive director of the Center for Environmental Law and Community Rights, an advocacy group based in the capital. of the country.
The project struggled to find financial backers, as French and Australian banks shied away from the project. It also has not announced long-term sales and purchase agreements, reflecting uncertainty about future gas demand.
A spokeswoman for the former Im declined to give a timeline for a funding decision. Papua New Guinea’s Ministry of Petroleum and Energy and White House officials did not respond to a request for comment.
The Ex-Im funding decision is particularly significant, said Kevin Morrison, an analyst at the Institute for Energy Economics and Financial Analysis.
“They’re the ones who will really lead by example,” he said.
