Even as the Biden administration, under pressure from environmentalists, hits pause on its approval of a major natural gas export terminal in the United States, it faces another big gas decision overseas.
A $13 billion natural gas export project in Papua New Guinea led by TotalEnergies and Exxon Mobil is on a shortlist of projects set to receive financing from the U.S. Export-Import Bank, or Ex-Im, which supports American businesses around the world.
The Papua LNG gas project would join a portfolio of oil and gas projects the bank funds, including an oil refinery in Indonesia and an oil tank project in the Bahamas. The bank is also considering financing an offshore pipeline and natural gas plants in Guyana.
Some climate activists see a big contradiction between climate actions the government is taking in the United States versus around the world.
“He’s done so much at home,” said Kate DeAngelis, who works on international finance at Friends of the Earth, a network of environmental organizations that has called on the bank not to finance the project, referring to President Biden.
But he “can’t claim to be a climate champion when the U.S. is propping up this fossil fuel infrastructure all over the world,” she said.
Between 2017 and 2021, Ex-Im Bank, whose board of directors are political appointees, provided nearly $6 billion in financing for fossil fuels projects and $120 million for clean energy, according to a tally by the Perspectives Climate Group and the nonprofit group, Oxfam.
A senior Ex-Im official told The Times that while the bank “seeks to align with the administration’s climate agenda,” it still needed to 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 U.S. jobs.”
The Papua gas project has been particularly contentious. It promises to bring wealth to one of the world’s poorest nations, and is staunchly supported by the local government. Its operators are seeking to supply Asian nations with gas in order to move away from coal, the dirtiest-burning fossil fuel and a major driver of climate change.
The gas project “will contribute to the security of LNG supply, especially for customers in Asia, where LNG can substitute coal for power generation and participate in a substantial reduction of CO2 emissions in the region,” Julien Pouget, a vice president at TotalEnergies, said last year. LNG stands for liquefied natural gas.
Whether gas displaces coal, instead of simply adding new capacity or crowding out renewable sources of energy like wind and solar, varies widely by country. Environmental groups point to research that increasingly questions the climate benefits of switching to gas. And liquefying the gas for transport in oceangoing tankers is energy-intensive.
For Papua New Guinea, a largely rural nation of about 10 million people, the emissions jump would be enormous. The project itself, the nation’s second liquefied natural gas project, will add more than 7 percent to its 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 venture.
TotalEnergies said in a statement that it was “fully committed to reducing the project’s footprint to the strict minimum.” The project, for example, plans to power its processing of natural gas with a gas and steam turbine, as well as solar energy, according to the company.
Local environmental groups have warned that the project, set to be built in a remote area of the country with little previous mining or oil and gas development, will be detrimental to biodiversity.
A previous gas project, led by Exxon and supported by Ex-Im, became mired in allegations of environmental destruction and human rights violations. Papua New Guinea is already one of the most vulnerable countries in the world to natural hazards, including 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 Centre for Environmental Law and Community Rights, an advocacy group based in the nation’s capital.
The project has struggled to find financial backers, after French and Australian banks shied away from the project. It has also not announced any long-term sales and purchase agreements, reflecting uncertainty over future gas demand.
An Ex-Im spokeswoman declined to give a timeline for a financing decision. Papua New Guinea’s Department of Petroleum & Energy and White House officials did not respond to a request for comment.
Ex-Im’s financing decision is particularly important, said Kevin Morrison, an analyst at the Institute for Energy Economics and Financial Analysis.
“They’re the ones who are really going to set the example,” he said.