Under the terms of a landmark settlement reached last Friday, U.S. financing agencies will no longer be able to ignore the climate change repercussions of their actions.

Close to seven years and several bruising court battles later, a coalition of environmental groups and eco-minded cities have succeeded in forcing the Export-Import Bank and Overseas Private Investment Corporation (OPIC) to do the unthinkable: acknowledge the reality of climate change and obey the law.

Greenpeace, Friends of the Earth, and the city of Boulder, Colorado, originally filed suit against the two U.S. financing arms in mid-2002. Several cities in California – Santa Monica, Arcata, and Oakland – later joined the lawsuit. They argued that the two agencies were violating the terms of the National Environmental Policy Act (NEPA) by offering over $32 billion in funds and insurance to fossil fuel projects without assessing their environmental impact.

To ensure new federal actions abide by existing environmental legislation, NEPA requires agencies to submit environmental impact statements (EISBetween 1995 and 2006, the Export-Import Bank and OPIC provided over $21 billion in financing to oil refineries, pipeline projects, electric power plants, and liquefied natural gas (LNG) plants, according to a 2007 Los Angeles Times investigation. The results were not pretty:

“A snapshot of the environmental impact can be seen in a sample of projects subsidized in Russia, Mexico, Venezuela, Algeria, China, Brazil, Turkey and India. Those 48 projects alone will be responsible for at least 12 billion metric tons of carbon dioxide emissions over their lifetime, or at least 600 million metric tons annually, according to a Times analysis of data provided by Friends of the Earth. The organization used data from the lending agencies’ records, and emissions were calculated by analyst Richard Heede of Climate Mitigation Services, a private Colorado firm. CO2 figures were not available for more than 150 additional projects in those eight countries.”

Though these dealings began under Clinton’s watch, they reached their nadir during the Bush era. Just a few weeks before pledging to cooperate with international efforts to curb greenhouse gas emissions at the G8 summit in June 2008, the Bush administration agreed to provide $500 million in loans to an advanced oil refinery project in Jamnagar, India.

The refinery, owned and operated by Reliance Industries, will emit close to 9 million metric tons of carbon dioxide every year according to an assessment by the Export-Import Bank. That refinery was only the last in a long line of carbon-intensive projects funded by the two agencies to the tune of several billions of dollars. In 2005 alone, they extended more than $3 billion in financing for the fossil fuel industry.

At the time that the lawsuit was filed, the Bush administration (predictably) argued that the agencies were not subject to NEPA and that the “alleged impacts of global climate change are too remote and speculative” to be part of their project assessments. The “expert” hired by the Bush crew to defend the agencies’ actions was – shocker – a well-known (and debunked) climatologist, David R. Legates of the University of Delaware.

As the LAT notes, he and four other skeptics authored a paper used by the Bush administration a few years beforehand to attack the climate consensus; not surprisingly, the five authors were linked to think tanks funded in part by Exxon Mobil.

Thankfully, with a new, scientifically-literate administration now in office, the two agencies have relented, agreeing to take the emissions generated by the funded projects into consideration and pledging to address climate change directly. The Export-Import Bank will establish an agency-wide carbon policy, while OPIC will cut emissions associated with the projects by 20% over the next decade; both will also boost funding for renewable energy projects.

At this rate, we may get back to environmental normalcy by the end of President Obama’s first term.

This month we’re giving away FREE copies Nobel Laureate Dr. Andrew Weaver’s new book Keeping Our Cool: Canada in a Warming World.

Go here to find out more details about DeSmogBlog’s monthly book give-away.