Export-Import Bank:

Reaching New Targets for Environmentally Beneficial Exports Presents Major Challenges for Bank

GAO-10-682: Published: Jul 14, 2010. Publicly Released: Jul 14, 2010.

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The Export-Import Bank (Ex-Im) provides financing to support U.S. exports, and its support for environmentally beneficial exports has been of long-standing congressional interest. In fiscal year 2008, Congress directed Ex-Im to allocate 10 percent of its annual financing to renewable energy and environmentally beneficial products and services. For fiscal years 2009 and 2010, it directed Ex-Im to allocate 10 percent to renewable energy and energy efficient end-use technologies. In 2009, it directed GAO to conduct a review of Ex-Im's efforts to meet congressional directives concerning environmental exports financing. This report addresses (1) the extent of Ex-Im's financing of renewable energy, energy efficient end-use technologies, and other environmentally beneficial exports; (2) Ex-Im's definitions for, and its reporting on, these exports; and 3) the extent to which Ex-Im has followed strategic planning key practices in its planning efforts in these areas. GAO analyzed Ex-Im transaction data and planning documents and interviewed officials from Ex-Im, other U.S. agencies, state-level trade promotion agencies, environmental industry associations, and other industry experts.

Ex-Im's financing of exports it identified as environmentally beneficial was 1.3 percent of its total financing from fiscal year 2003 through the first half of fiscal year 2010. Ex-Im's environmentally beneficial exports include renewable energy, energy efficient exports including energy efficient end-use technologies, and a mix of other products with beneficial effects on the environment. Renewable energy was 0.23 percent of overall Ex-Im financing during the period. Ex-Im did not specifically report its energy efficient end-use financing through 2009, but officials stated the bank provided very little such financing over the period. Thus, Ex-Im financing for environmentally beneficial exports in general, and the smaller renewable energy and energy efficient end-use portion, has been well short of the 10 percent congressional target. Ex-Im needs to further clarify its definitions and improve its reporting on environmentally beneficial exports. Ex-Im recently began tracking its financing of energy-efficient end-use technologies in its internal data. In March 2010 the bank released a list of examples for identifying the broader category of energy efficient technologies and services, but the list does not clearly identify the energy efficient end-use examples. Defining energy efficiency products and services is inherently challenging overall, and agencies sometimes use terms differently depending on their organizational needs. Thus, clear Ex-Im definitions are important for communicating with Congress, potential exporters, and others. Ex-Im could benefit from more consistently following strategic planning key practices in its environmentally beneficial financing efforts. These include, for example, involving stakeholders, assessing internal and external environments, and realigning resources if needed. For example, while Ex-Im routinely shares information with stakeholders, such as other trade promotion agencies, industry associations, and lenders, it has not clearly communicated that it has a target requiring substantial increases in financing for this area. GAO recommends that Ex-Im (1) Develop clear definitions for its subcategories of environmentally beneficial exports--specifically energy efficient end-use exports-and report its financing in these areas, and (2) Consistently implement key strategic planning practices in this area.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Export-Import Bank agreed with our findings and stated that it would strive to implement our recommendations promptly. Ex-Im has published on its website examples of energy efficiency items, including examples in a definitional subcategory for end-use energy efficient exports. It has also included the level of financing provided for energy-efficient end-use technologies in Ex-Im's annual report in 2011. These actions fully address our recommendation.

    Recommendation: To improve the planning and reporting of its activities related to environmental exports, the Chairman of the Export-Import Bank should develop and provide clear definitions for its subcategories of environmentally beneficial exports--especially energy efficient end-use technologies--and report annually on the level of financing for each of the subcategories. These definitions should be developed in conjunction with other agencies as appropriate.

    Agency Affected: Export-Import Bank of the United States

  2. Status: Closed - Implemented

    Comments: The Export-Import Bank agreed with our findings and stated that it would strive to implement our recommendations promptly. Ex-Im has laid out its recommendations for increasing Ex-Im Bank's support for renewable energy in its FY 2011 Business Plan for internal stakeholders, which include communicating Ex-Im's support for renewable energy exports to external stakeholders through conference attendance, speaking engagements, and industry outreach. Ex-Im has also reported on the results of their planned FY 2011 and FY 2012 business development activities, as a follow up to its FY 2011 Business Plan. These actions address part 1 of this recommendation. Ex-Im provided examples of assessments determining internal and external factors affecting environmental financing. It also stated that in response to increased demand and specific factors outlined in the assessments (eg, increased solar transactions in India), the Bank had dedicated one staff person in the Project Finance Division, to be the subject matter expert for renewable energy within the Division. These actions address parts 2 and 3 of this recommendation.

    Recommendation: To improve the planning and reporting of its activities related to environmental exports, the Chairman of the Export-Import Bank should consistently implement key practices for effective strategic planning, including the following (1) clearly communicating the bank's priorities for increasing financing of renewable energy and energy efficient end-use technologies to both internal and external stakeholders, and soliciting input on how to do so; (2)demonstrating in the bank's strategic planning documents a more complete and systematic assessment of external and internal factors affecting environmentally beneficial exports financing, such as market information for energy efficiency exports and the availability of needed Ex-Im services for exporters; and (3) using these assessments to determine the resources required and realign resources if needed.

    Agency Affected: Export-Import Bank of the United States

 

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