ECAs remain heavy supporters of fossil fuels, despite some moves within the OECD to encourage more renewable energies through ECA financing.
The ECAs of OECD countries alone support fossil fuel to the tune of US$100 billion per year. The OECD ‘Sector Understanding’ on export credit for renewable energies and climate change mitigation projects is intended to promote renewable energy projects and industries, but has been heavily criticised.
ECAs and renewable energies
Decades of ECA support for traditional energy projects has encouraged developing countries to pursue a fossil fuel based trajectory, while undermining international efforts to promote ‘clean energy’. Although ECAs do not see themselves as development agents, governments are increasingly recognising that such a disconnect between stated political goals (such as the Millennium Development Goals and the Kyoto Protocol) and the activities of official Export Credit Agencies is untenable.
In 2007 the European Parliament passed a resolution calling for an end to taxpayer support for fossil fuel project, including via ECA.
In 2012, the OECD introduced a new ‘Sector Understanding' on renewable energy, climate change mitigation and water projects’ as part of the OECD Arrangement, effectively enabling ECAs to subsidise renewable energy projects. The agreement allows preferential financing terms for traditional renewable energy sources, with newer renewable industries under consideration for future iterations of the agreement.
The OECD ‘Sector Understanding...’ includes large dams in its definition of renewable energies, allowing large-scale, destructive hydropower projects to enjoy preferential terms and subsidies. See the Large Dams issue page for more on this.
Dodgy deals and renewables
By providing billions of dollars of financing for fossil fuel projects, ECAs undermine international efforts to steer a ‘green energy’ course for the future. ECA financing for traditional energy forms far outstrips financing for renewable energies, and some large fossil fuel projects might not have been initiated without ECA support – for instance the Sason coal fired plant.
What is ECA Watch doing?
ECA Watch lobbies for an end to ECA financing for fossil fuels, and for a change to the OECD Sector Understanding to support truly sustainable and renewable energy sources.
Read this letter from ECA Watch on the OECD Sector Understanding.