US Approves $4.7 Billion Loan for Controversial Mozambique LNG Project

The U.S. has authorized a $4.7 billion loan for the Mozambique LNG project, deemed a “carbon bomb” due to environmental concerns and alleged human rights violations. This loan is seen as essential for advancing one of Africa’s major energy projects. Critics argue it undermines climate pledges and raises ethical concerns over taxpayer money being allocated to such ventures.

The United States government has sanctioned a $4.7 billion loan for a liquefied natural gas (LNG) project in Mozambique. This initiative, undertaken by TotalEnergies, is situated in the Cabo Delgado region and has faced severe criticism for being labeled a “carbon bomb” amid allegations of human rights violations. Despite the increasing scrutiny, the U.S. Export-Import Bank (EXIM) approved financial support, which is reportedly crucial for advancing one of Africa’s largest energy projects, with a total cost of approximately $20 billion.

Previously, the EXIM had tentatively supported the Mozambique project in 2019. However, an event of “force majeure” triggered by TotalEnergies’ construction pause due to an attack by the Al-Shabaab militant group in 2021 necessitated a new agreement. The attack resulted in a tragic loss of civilian lives, estimating up to 1,200 fatalities or disappearances.

French authorities have launched investigations against TotalEnergies for possible involuntary manslaughter, stemming from failures to ensure subcontractor safety during the insurgency. In parallel, reports have emerged alleging that Mozambican soldiers, stationed at the plant, were implicated in serious human rights abuses against civilians, accusations that TotalEnergies has denied.

Despite plans to resume construction in 2024, the company has revised its timeline, indicating that operations will not commence before 2029 due to ongoing security challenges and uncertainties regarding funding. Patrick Pouyanné, CEO of TotalEnergies, previously lobbied for U.S. support, emphasizing the strategic partnership with American companies involved in contract awards for the project.

Environmental advocates have expressed strong opposition to the Mozambique LNG venture, categorizing it as a “climate and human rights nightmare” that could generate up to 121 million tonnes of CO2 equivalent annually over its foreseeable four-decade operational lifespan. Critics like Collin Rees of Oil Change International and Kate DeAngelis of Friends of the Earth US have condemned the project’s funding as a misuse of taxpayer dollars, asserting that it undermines the climate initiatives touted by the U.S. government.

Recognition of the potential environmental impact of the project has led to a re-evaluation of support by British and Dutch export credit agencies, who previously backed the initiative before its 2021 halt. Legal assessments are currently underway related to the UK’s financial commitments, with calls for decisive actions from leaders like Prime Minister Keir Starmer to reconsider the project’s backing, especially in light of its controversial implications.

The U.S. government’s approval of the $4.7 billion loan for the Mozambique LNG project signifies a notable shift in policy, aligning with fossil fuel financing despite prior commitments to climate initiatives. The project, condemned by environmentalists and linked with human rights abuses, epitomizes the challenges in balancing energy development and social responsibility. Future discussions surrounding international aid and support for fossil fuel projects will be crucial as geopolitical dynamics evolve.

Original Source: www.climatechangenews.com