(ECA Watch, Paris, 27 December 2007) In last month's What's New, we reported on a European Parliament resolution calling for an end to taxpayer support for fossil fuels projects, including via official export credit agencies (ECAs). In a related story, reports from the U.N. climate change conference in Bali note that poorer countries have accused the rich of pressuring them to control emissions of greenhouse gases blamed for global warming, while refusing to provide them with the technologies needed to do so without hurting their economies. Ironically, OECD export credit agencies recently postponed an evaluation of renewable energy incentives for lack of projects to evaluate. The UK's Environment Minister has admitted that a £50 million fund set up by the ECGD to support the export of renewable energy technologies had not received a single application in six years.
A New York Times article earlier this month exposed the refusal of the U.S. Federal Reserve to listen to warnings about the sub-prime mortgage scandal over many years, and to persuade or regulate subprime lenders to adopt a code of "best practices" which could have avoided the current credit crisis. In a similar false reliance on the market to resolve such serious global problems, export credit agencies from OECD member countries are ignoring their potential to reduce greenhouse gas emissions by continuing to support fossil fuel energy projects within their combined US$100 Billion per year budgets.Not only promoting fossil fuel projects such as passenger aircraft (40% of OECD ECA long-term portfolios), pipelines and oil extraction, refineries, etc., some ECAs have provided subsidies for so-called carbon offset projects such as pulp mills, industrial monoculture plantations, mining in forested areas and other enterprises that result in displacement, impoverishment and ecological degradation. At a UNEP Vienna workshop on export credit and the environment in April 2006, some participants even promoted ECA insurance for CDM projects, including non-delivery of certified emissions, i.e. support for the global market in significantly unsubstantiated emission cuts!
George Monbiot in a recent Guardian article argues that, as a result of distorted, Kyoto created carbon markets, the demand... "for low-carbon technologies has remained moribund. Without an assured high value for carbon cuts, without any certainty that government policies will be sustained, companies have continued to invest in the safe commercial prospects offered by fossil fuels, rather than gamble on a market without an obvious floor."
While ECAs do not see themselves as development agencies nor promotors of sustainable development, they are important financial actors, and have a duty, as state-owned, taxpayer funded, official bodies, to respect the international environmental and developmental commitments and obligations of their nations, by avoiding, mitigating and/or reducing environmental and social harm abroad.
The policy inconsistencies in these areas are serious, and bring into question the ability of OECD members to maintain any coherence in their international commitments.