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· Earth
Summit 101 Corporate Impacts Issue Briefs: Water, Biodiversity Polluted
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Paying Corporate Polluters |
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Energy Subsidies Energy legislation endorsed by the Bush administration and pending in Congress would provide more than $33 billion in taxpayer handouts to polluting energy companies. The oil, gas, coal and nuclear power industries are poised to reap tremendous financial gains over the next ten years should H.R. 4 be enacted into law. In total, the federal government would hand out $61.7 billion over the next ten years, in proposed and existing tax breaks and spending subsidies to corporate polluters. The oil and gas industry is by far the biggest winner in both current and proposed spending and tax policies. If H.R. 4 were enacted, subsidies would skyrocket: in total the oil and gas industry would receive more than $46 billion in taxpayer handouts over the next ten years. Environmentally, the oil and gas industry is a dirty business. From the point of extraction to combustion, oil destroys pristine wild lands, pollutes the air and damages delicate marine ecosystems. The coal and commercial nuclear power industries would also see gains, collecting $8.7 billion and $6.6 billion over ten years, respectively. The burning of fossil fuels such as coal has profound implications for the environment. Coal pollutes the environment at all points in its commercial life cycle, from mining to combustion. Unregulated disposal practices from coal mining contaminate drinking water and nearby land. Toxins such as arsenic, mercury, chromium and cadmium are released into unlined ponds and landfills, leach into groundwater and ultimately contaminate drinking water. The grim economic and safety realities were forcing the nuclear power industry to go the way of the dinosaurs. However, the Bush Administration, led by Vice President Cheney and the NEPD Group, has advocated for the rebirth of nuclear power. At the rollout of the administration's energy report Vice President Cheney maintained, "America should also expand a clean and unlimited source of energy, nuclear power." Unfortunately, nuclear power is neither cheap nor clean. Environmentally, the use of nuclear power has created a legacy of radioactive waste and there is currently no safe disposal for this deadly waste. Export Assistance for Polluters Polluters receive billions from the federal government in the form of export assistance. U.S. export credit agencies - the Export-Import Bank (Ex-Im) and Overseas Private Investment Corporation (OPIC) - provide loans and investment guarantees to corporations like Shell and Exxon-Mobil for their operations around the globe. Critics of the Kyoto Protocol complained that greenhouse gas pollution is growing rapidly in countries like China and India that are not required to reduce emissions. But the U.S. itself is fueling this pollution through unbalanced Ex-Im and OPIC loan portfolios that are heavily weighted toward fossil fuels. In 2000, Ex-Im provided $2 billion to fossil fuel development overseas. Moreover, the United States is the biggest producer of greenhouse gases, accounting for a quarter of the world's output. The effects of the warming of the earth's surface are potentially catastrophic. Using U.S. taxpayer dollars via the Overseas Private Investment Corporation (OPIC) and the Export-Import Bank of the United States (Ex-Im), U.S. government agencies are using public money to support fossil fuel extraction projects around the world, primarily to take oil from developing countries and bring it back to the United States. Fifty-six percent (56%) of oil consumed in the U.S. comes from other parts of the world like Nigeria, Venezuela, the Middle East and Mexico. Chapter 8 of the Bush/Cheney Energy Plan seeks to expand that even further. OPIC and Ex-Im are involved in virtually every major fossil fuel extraction project in the world. Despite requirements under the National Environmental Policy Act to assess the climate change impacts of these projects, the Bush Administration is not in compliance and U.S.-caused greenhouse gas emissions continue to rise. At the same time, OPIC and Ex-Im are proliferating the use of dirty fossil fuel power schemes in countries like India, Indonesia and China causing increases in their greenhouse gas emissions, yet ironically President Bush walked away from Kyoto stating that key developing countries must commit to reducing their emissions. OPIC and Ex-Im combined have supported over $32 billion dollars in fossil fuel investments worldwide over the past 10 years. The types of projects include many of the largest new oil field developments in South America, Mexico, the Caspian region, southeast Asia, and west Africa, and related infrastructure like pipelines, gas processing plants and oil refineries. Of this $32 billion, over $2.3 billion has supported Halliburton and over $3.5 billion went to Enron. Combined, these agencies' projects ultimately will result in over 32 billion tons of carbon dioxide emissions. These emissions will be released by the scores of fossil fuel power projects that these agencies back, or by the eventual burning of fuels that are being extracted and transported using ExIm and OPIC finances. The amount of carbon dioxide that will be released, ultimately, by projects supported by these US government agencies is much higher than the entire amount of CO2 that was released from the WORLDWIDE consumption of petroleum, natural gas, coal, and the flaring of natural gas in the year 2000 (that is, 32.1 billion tons versus 23.5 billion tons). Enron's Cuiaba Pipeline Project The Washington Post broke a story prompted by Friends of the Earth's findings that bankrupt Enron Corporation received $2.4 billion of U.S. taxpayer money for outstanding loans, guarantees and insurance from the U.S. Overseas Private Investment Corporation (OPIC) and the Export- Import Bank of the United States (Ex-Im). Since Enron was so skillful at blocking bad publicity, ony now are the problems with these damaging projects finally coming to light. In the case of Enron's disastrous Cuiaba pipeline project, which runs from Bolivia to Brazil, the Bush Administration was facing a tough decision: release hundreds of millions of dollars to Enron for this pipeline that has fractured indigenous communities and the last intact tropical dry forest in Bolivia, or cancel the loan. Enron lobbied Congress to save OPIC from extinction, and in return OPIC approved the project in 1999. The pipeline is a year behind schedule due to "unanticipated" environmental problems. It is not only destroying the world's largest remaining tract of primary tropical dry forest-the Chiquitano Forest-and harming the Pantanal - the world's largest wetland -but it directly violates OPIC's own environmental policies. Friends of the Earth has been working with non-governmental organizations and indigenous groups in Bolivia to stop this project from the start. Recently under increased congressional and public scrutiny, OPIC cancelled the loan, seeking to walk away from the problems enabled by the U.S. government. "While taking taxpayer dollars away from Enron is good, the damage has already been done, and promises of a $20 million conservation fund from Enron and their minority partner Shell, which were a key condition of OPIC Board approval of the project, have evaporated," said Friends of the Earth President Brent Blackwelder. Separate field visits and reports by non-governmental organizations all reveal contractual violations and chronic environmental problems. Key violations include: unfettered access to the right of way; creation of unplanned access roads; failure to implement a long-term Indigenous Peoples Development Plan; negative impacts to the Pantanal Wetland; destruction of primary tropical forest; and associated impacts including the opening of a gold mine in the middle of the Chiquitano Forest. Economic issues are astounding as well. According to The Washington Post, Enron booked $65 million in revenue in 1999 for the pipeline with a pair of accounting tricks. Enron wanted to record profits from the project by using market-to-market calculations, an accounting trick that allows projected revenue to be booked in the current year. But it was illegal for Enron to use such a calculation because its pipeline ultimately connected to an Enron power plant. To get around that, Enron sold a 13 percent stake in the plant for $11.3 million to LJM1, a partnership of Enron executives. That allowed Enron to book the revenue, and it did so in the last two quarters of 1999. All this while the pipeline was not even delivering gas to the power plant that would allow real revenue to be produced. Now rather than face the problems it has caused and its own lack of due diligence for loans, OPIC has taken a hit-and-run strategy. Friends of the Earth maintains that OPIC and Enron owe an ecological debt to the indigenous peoples of Bolivia and Brazil for harming their communities and the ecologically sensitive forest. OPIC should: · Acknowledge the problems it has caused with Enron in
Bolivia and lessons learned for future lending practices using
U.S. taxpayer dollars; |