It's Not Just About Copenhagen

It's a strategic gamble Barack Obama is making by going to Copenhagen at the end of the U.N. climate-change conference instead of at its start. The president's idea is to close the deal rather than open discussions with a long list of unlikely promises. That leaves Todd Stern, America's lead representative in Denmark, to fight a rearguard action against claims that the United States owes climate-change reparations in the meantime. If our disproportionate emissions levels have caused damage to countries in the developing world, we should have to pay the cost, they argue. It’s a damned mess. The stakes are high for both Obama and the United States -- the crisis is one of credibility, and reputations are on the line.

So explain this: In the middle of these heated climate-change discussions, the Export-Import Bank of the United States, the federal credit agency tasked with boosting American exports, announces a final agreement on the largest financing project in its 75-year history. The bank has brokered a $3 billion deal to help Exxon Mobil and other companies build a liquefied natural gas plant as well as a 400-mile pipeline to move the gas in Papua New Guinea. The gas is located in Papua New Guinea's remote highland areas, and it will have to be moved to the coastal region by a 190-mile pipeline and then transported through a different 250-mile stretch of undersea pipeline to the processing plant. By conservative estimates, the project will result in an additional 3.1 million tons of carbon dioxide pumped into the atmosphere every year.

Environmentalists are crying foul.

"Ex-Im Bank’s announcement in the early days of the Copenhagen climate talks shines a spotlight on the hypocrisy between this federal agency’s massive subsidies for fossil fuel projects and the U.S. government’s commitment to end fossil fuel subsidies," proclaimed Doug Norlen, policy director for Pacific Environment, a San Francisco group that has waged war on the public financing of environmentally harmful projects for years.

The Export-Import Bank deal is only part of it. The Papua New Guinea project is a huge $15 billion effort led by Exxon but includes companies from Australia and Japan as well. It is being sold as the country's biggest foreign investment to date -- an economic game changer for the Pacific island nation that could triple export revenue and turn the country into one of the world's most significant energy producers.

The downside, of course, is that the project threatens to accelerate the already brisk destruction of some of the world's most pristine and valuable tropical rainforests.

"[It] undercuts the Obama administration's claims that they care about reducing fossil-fuel emissions when your chief credit-financing agency is financing fossil-fuel projects that make the problem worse," Norlen told me.

But in the current economic environment, the Export-Import Bank’s mission to advance a project that will boost U.S. exports all while preserving American jobs, may take priority over environmental concerns half a world away. Accord to bank officials, there are more than 60 American export companies that will directly benefit from the PNG deal. Bank officials also insist that they are not oblivious to the concerns about fossil-fuel emissions. Indeed, last month, the Export-Import bank became the first agency of its kind to adopt a "comprehensive carbon policy to guide its support of United States exports in light of climate-change concerns."

Bank officials seem ambivalent about the new policy and argue that U.S. withdrawl from projects involving fossil fuels will only drive the business elsewhere and hurt American workers. The bank's solution to this problem is to lobby other member countries of the Organization for Economic Cooperation and Development to adopt similar carbon-reduction policies. But environmentalists say that gradualism is not acceptable and only worsens the problem. "[The Export-Import Bank] also [has] in their charter a responsibility to do no harm to the environment," Norlen insisted. "Instead they are throwing gasoline on the fire of climate change and making things worse."

Norlen understands that he works in a field where victory often looks like defeat. The projects he campaigns against never die; they almost always get built. His best hope is to try to contain them and the damage they do. Recently he has devoted his time to making sure that these projects get as little public funding as possible.

"The point now is to reduce public financing for these fossil-fuel projects so that it is harder for them to get built and eventually to have that money go into the financing of renewable-energy projects," Norlen said.

Norlen knows that it'll take a while -- if ever -- before his vision is realized. The best evidence of the challenges that he and other activists face is that the government most in favor of this project is not our own but that of Papua New Guinea. This summer, Arthur Somare, its minister for public enterprises, praised Exxon’s efforts and celebrated the project's potential. "This puts Papua New Guinea, which will have a direct 19.4 percent equity in the LNG [Liquefied Natural Gas] project, right on deadline to become the world’s newest LNG supplier by late 2013 or early 2014."

Exxon executives also stress that widespread support for the project exists in Papua New Guinea, pointing to an "Umbrella Benefits Sharing Agreement" signed by government officials and landowners alike. And Miles Shaw, the chief spokesperson for the project, argues that the project will boost Papua New Guinea's economy at large.

But at what price to the environment? Norlen also points out, "These projects generally benefit the elite in these countries, and the wealth hardly ever trickles down."

It will be interesting to see how  Obama finesses Exxon's role as a super-producer of greenhouse-gas emissions coming out of Copenhagen, particularly in these tough economic times. Certainly, projects like the one in Papua New Guinea, which pit the environment against the economy, don't make the task easy.