Pressure is building on the Export-Import Bank of the United States (US Exim) to formally cull support for oil and gas, after the Biden administration called for an immediate end to overseas fossil fuel financing.

In a diplomatic cable sent to US embassies earlier this month, a leaked version of which has been seen by GTR, the White House issued interim guidance ruling out federal funding for unabated or partially abated coal generation in any instance.

The memo also indicated that department and agencies should halt support for other foreign “carbon-intensive projects”, including oil and gas projects with a lifecycle intensity of more than 250 grams of CO2 per kilowatt-hour.

The guidance applies to projects across the supply chain requiring at least US$250,000 in funding, and there are potential exemptions for projects deemed to fulfil a national security goal, are imperative from a geostrategic perspective, or help promote energy access in vulnerable areas.

Non-profit environmental organisation, the Natural Resources Defense Council (NRDC), says in a statement the guidance will “finally end longstanding US financial support for overseas gas and oil projects”.

“This new US guidance is an important, overdue step that must be followed with concrete action. That means all US agencies must decisively stop financing gas, oil, and coal projects overseas and shift investments into clean, renewable energy projects around the world,” says Jake Schmidt, senior strategic director for international climate in the international programme at NRDC.

Bronwen Tucker, global public finance campaign co-manager at non-profit Oil Change International, tells GTR it is not possible to fully predict the memo’s implications, as the leaked version contains many, but not all of, the details.

But she says the guidance is “significant and will likely rule out almost all international public finance for fossil fuels from the US”.

Based on what is stated in the memo, Tucker says federal funding will possibly only be provided where energy access is not better served by renewables.

The guidance comes amid mounting global efforts to end public financing for unabated fossil fuels.

At the Cop26 climate summit in November, a number of countries including the US, EU, UK and Canada signed a pledge backing an end to direct support for unabated oil, gas and coal by the end of 2022.

Alongside other OECD members, the US also vowed to end export credit support for unabated coal-fired power this year, though the country is yet to do the same for oil and gas.

Gas has featured particularly heavily in US Exim’s activities in recent years. In 2020, it was one of a number of export credit agencies (ECAs) to support a major onshore liquified natural gas project in Mozambique, approving a direct loan of nearly US$5bn.

Tucker suggests the ECA may find it harder to support deals in these sectors, in light of the guidance.

“US Exim is covered by the guidance and will need to apply for exemptions for any projects they would like to support. There do not appear to be any US Exim specific loopholes in the policy,” she says.

A US government source could not confirm to GTR that the guidance would spell the end for US Exim’s support of oil and gas.

Nevertheless the source notes: “As with any new executive branch guidance, Exim, as an independent agency, must work to align these types of efforts within the agency’s charter and statutory provisions.”