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February 17, 2009 / Mridul

US Financing Groups to Monitor Environmental Impacts of Overseas Projects They Invest In

Under a settlement agreement in a lawsuit brought by Greenpeace and Friends of Earth, the U.S. Export-Import Bank and the Overseas Private Investment Corp. have agreed to ask for environmental statements from countries seeking US financial aid to set up projects.

Both the financing groups have also agreed to invest $250 million each in renewable energy and ensure that the projects they have invested in reduce carbon emissions by 20 percent.

Greenpeace and Friends of Earth, along with three cities from California and one from Colorado, filed the lawsuit against the financing groups in 2002 arguing that the projects they help fund could affect earth’s climate which, in turn, could effect the sea levels around America’s coasts. From 1995 to 2006, the Ex-Im Bank and OPIC provided more than $21 billion in financial aids to countries around the world for projects like oil & gas pipelines, electric power plants and oil refineries.

It is astonishing to know that these groups never asked for environmental statements from the companies managing the projects, even the international investments agencies like the World Bank and Asian Development Bank ask for environmental statements. The credit for the delay in this procedural change is partially shared by the Bush administration.

The Bush administration had argued that the two agencies were not subject to the National Environmental Policy Act, which requires government projects to include impact statements. It had also contended that the “alleged impacts of global climate change are too remote and speculative” to be part of the agencies’ project reviews.

A study conducted by the Friends of Earth found that

48 projects in Russia, Mexico, Venezuela, Algeria, China, Brazil, Turkey and India found that they would emit 12 billion metric tons of planet-heating carbon dioxide emissions over their lifetime, or at least 600 million metric tons a year.

Using that data, the study holds the Ex-Im Bank and OPIC responsible for more than 7 percent of the world’s annual carbon dioxide emissions.

Being a signatory of the Espoo Convention on Environmental Impact Assessment which relates to the study of transboundary effects of major projects the United States should have asked these countries to conduct Environmental Impact Assessment studies according to international norms and prescriptions and provide it with Environmental Statements for the projects. The financing groups should have done this anyway as they were stakeholders in the projects.

Even as the US Congress debates ways of reducing the nations carbon emissions, the federal agencies must do whatever they can to promote best environmental practices around the world. These agencies can very well use their financial leverage to help the developing countries incorporate the internationally prescribed EIA practices in the evaluation of the projects. This would not only help reduce the carbon emissions but would also make the governments of these nations to evaluate some significant effects these projects could have which, otherwise, maybe overlooked.

This article was first posted on Red, Green and Blue (Green Options)

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