By upgrading its energy finance strategy through smart reforms and strategic investment, the United States can cement its role as the go-to energy partner for the future.

The global energy landscape is changing fast. Countries are scrambling to secure resources, invest in new technologies, and stay ahead in an increasingly competitive market. At the same time, U.S. oil and gas production is booming, artificial intelligence (AI) -driven electricity demand is surging and America remains heavily reliant on foreign critical minerals. Growing instability in key strategic regions and rising competition with China  has increased the stakes for U.S. national security, economic strength and global partnerships.

America needs smart export and development financing policies to maintain global leadership. Agencies like the U.S. International Development Finance Corporation (DFC) and the Export-Import Bank of the U.S. (EXIM) are key tools for projecting American energy dominance and pushing back against China’s aggressive, state-funded energy expansion. With both agencies up for reauthorization this Congress, now is the time to modernize their mandates, cut red tape, and give them the support they need to secure U.S. energy leadership on the global stage.

Geopolitical Competition and Energy Security

In recent years, the fracking boom and America’s rise as the world’s largest LNG exporter underpinned U.S. global energy influence. In 2023, U.S. LNG helped cut Russia’s share of Europe’s gas market from forty percent in 2021 to just eight percent , proving that energy exports are more than just economic assets – they’re strategic tools.

Although the U.S. leads in key areas, competitors like China and Russia aren’t sitting still. China  has invested nearly $1 trillion into clean energy projects annually while building ninety-four gigawatts of new coal capacity. Meanwhile, China and Russia dominate nuclear fuel and critical mineral supply chains, using predatory financing to lock in energy deals across emerging markets.

The U.S. can’t afford to let its competitors outmaneuver it. By modernizing key federal agencies, Washington can provide nations with competitive alternatives, securing America’s leadership in global energy for decades.

Strengthening U.S. Energy Leadership Through Strategic Financing

If the United States wants to stay ahead in global energy markets and compete with China’s massive state-backed investments, the administration needs to double down on promoting American commercial energy projects abroad. The DFC and EXIM are critical tools for backing American energy innovation and infrastructure, but bureaucracy and outdated policies make them less effective. Their upcoming reauthorizations offer prime opportunities to fix that.

Right now, the DFC makes money for the U.S. taxpayer but can only provide up to $1 billion in loans and only $60 billion in total, compared to China’s nearly unlimited state financing. Raising these caps would allow the United States to fund bigger projects, like nuclear plants and critical minerals infrastructure, that shape the future of energy. In addition, fixing how the federal government’s archaic budget rules affect the DFC is also necessary so it can fully use its resources to help American companies compete globally.

Beyond financing, the DFC needs more flexibility in where it operates. Right now, it’s largely restricted to low-income countries, even though some of the most strategic opportunities are in upper-middle-income nations where China is already deeply invested. Expanding eligibility would allow the  United States to offer a strong alternative. At the same time, currency risk remains a major challenge in many markets, making it difficult for projects to reach commercial viability. Giving the DFC better tools to manage foreign exchange fluctuations would make projects more bankable and crowd in private investment.

Alongside enhancements to DFC, now is the time to give the EXIM a strategic upgrade. For instance, EXIM’s existing China and Transformational Exports Program (CTEP) aims to prioritize strategic projects in areas where Beijing is aggressively expanding its influence but is overly-prescriptive in scope. Expanding this effort to compete against more countries, such as Russia in more technologies, such as nuclear energy, through the creation of a dedicated National Interest Account would allow the EXIM to prioritize energy investments that align with the United States’ strategic goals. Without an update protecting national interests, American companies will continue losing ground in key regions where long-term energy partnerships are taking shape.

Another roadblock to strengthening U.S. energy leadership is EXIM’s restrictive default rate cap on project financing, which puts U.S. companies at a disadvantage compared to Chinese and Russian state-owned firms. Raising this cap would help level the playing field and allow American nuclear technology, among other large-scale projects, to compete globally more effectively. Strengthening EXIM’s support for domestic energy manufacturing is also crucial, as boosting U.S. supply chains for key energy technologies will reinforce long-term energy leadership. More broadly, EXIM’s overall mission needs to reflect today’s geopolitical realities, ensuring it has the flexibility to support the U.S. energy sector in a competitive global market.

By making these common-sense changes, the U.S. can bolster its financing agencies, strengthen its role as the world’s energy leader, and give American companies the support they need to compete – and win – on the global stage.

The Clear Path Forward

The United States is at a turning point in the global energy race. With AI, industrial growth, and rising electricity demand putting more strain on supply chains and energy grids, America’s leadership in LNG, nuclear, and critical minerals is a huge advantage, but only if we act now.

Reauthorizing the DFC and EXIM is a prime opportunity to upgrade America’s energy financing strategy. Strengthening these institutions will help the United States offer better alternatives to China’s state-backed deals, secure energy for our allies and open new markets for American energy innovators.

If we don’t step up, the world will default to the cheapest option – often heavily subsidized Chinese technology. But with smart reforms and strategic investment, the United States can cement its role as the go-to energy partner for the future. The stakes are high – now’s the time to modernize, compete and win.

Niko McMurray is the Managing Director of International and Nuclear Policy at ClearPath, a DC-based conservative clean energy advocacy organization.

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