Nonprofits press Biden team to exclude natural gas projects from global public financing

Nearly 450 nonprofit groups are urging the Biden administration to include natural gas on the list of fossil fuels to be excluded from US public financing for projects overseas.

The administration's position could be important for gas infrastructure development in emerging markets eyed by US LNG suppliers as future sources of demand.

An early Biden administration executive order directed the US treasury and energy secretaries to work with two key financing entities -- US Export-Import Bank and US International Development Finance Corp., or DFC, -- to identify steps through which the US can "promote ending international financing of carbon-intensive fossil fuel-based energy," while advancing sustainable development.

The wording of the order and subsequent administration comments have left energy market observers uncertain whether gas project investments would be targeted, reversing Trump administration efforts to spur such financing overseas.

In a March 18 letter to multiple Biden administration officials including Treasury Secretary Janet Yellen and Secretary of State Anthony Blinken, the nonprofit groups asked that new gas infrastructure be excluded from eligibility for all government financing, with the potential for exceptions in very limited circumstances, such as for domestic consumption in the least developed countries.

Supporting gas "diverts resources from less polluting, economically advantageous renewable, efficiency, storage, and other solutions that truly support decarbonization," they wrote. "Recent research has shown that public finance for gas has seldom delivered significant energy access benefits, and alternatives are often more cost-effective."

Seeking global momentum

Groups signing on hailed from six continents, ranging from smaller local organizations to international non-profits such as Friends of the Earth, Natural Resources Defense Council and Oil Change International.

They argued that US action to end fossil fuel-related financing could help influence many other governments to do the same. They encouraged a commitment in time for the June G7 Summit, to help build momentum for UN climate talks and to help influence an Asian Development Bank review of its energy lending policy.

US LNG developers in recent years have encouraged steps such as Ex-Im credit support for potential buyers of long-term LNG contracts. During the Trump administration, there was also discussion of using the newly reconstituted DFC to take an equity position in LNG and other gas projects. Among its natural gas-related activities, in October, DFC signed a letter of support indicating interest in supporting an LNG terminal and 2,250-MW combined-cycle plant in Vietnam.

The American Petroleum Institute has argued that it constitutes environmental progress when Ex-Im helps build out LNG facilities in countries that currently get their power from coal and has encouraged the US to make it a priority to help India and China cut their emissions profile through use of LNG.

By contrast Han Chen, manager of energy for the international program at NRDC, in a statement releasing the nonprofits' letter, said it would be 'irrational' for an administration so focused on climate change to promote LNG facilities. "Those facilities could waste billions in taxpayer dollars and would lock countries into high-emissions pathways," she said.

"We urge the Biden Administration to act swiftly to end new financing for all parts of the fossil fuel supply chain (including for gas), stop new US fossil fuel support within 90 days across all government institutions, and work with other nations to end fossil fuel financing," the letter said.