(Environmental Defence, Ottawa, 15 April 2023) In a letter to Prime Minister Trudeau, a broad range of Canadian organizations note that it has been over a decade since Canada first committed to ending inefficient fossil fuel subsidies. Instead of fulfilling this promise, the Government of Canada has continued to provide billions of dollars to oil and gas companies year after year. Now, the federal government has a critical opportunity to correct its track record and become a global leader in its efforts to eliminate fossil fuel subsidies. Noting the much-anticipated Assessment Framework for Fossil Fuel Subsidies has the potential to set an example for the rest of the world – if the framework delivers the highest possible ambition. Conversely, a weak framework could damage Canada’s credibility in international fora and set a dangerous precedent for other countries. Canada should use the World Trade Organization Agreement on Subsidies and Countervailing Measures Article 1.1 definition of subsidies to ensure all relevant measures are captured in the review. The definition of subsidy used must ensure that all tax and non-tax measures that benefit fossil fuel producers are captured in the review. Canada spent $18B on financial supports for the fossil fuel industry last year.
Canada
Asociación de Cooperativas Argentinas (ACA) Borrows $80m from FMO, FinDev Canada, Rabobank to Boost Farm Exports
(Microcapital Monitor, Boston, 10 March 2023) Asociación de Cooperativas Argentinas (ACA), a network of 143 agricultural cooperatives in Argentina, recently borrowed USD 80 million from three institutions, led by the Dutch development bank Financierings-Maatschappij voor Ontwikkelingslanden (FMO). FMO is lending ACA half of the total, and the Canadian government’s FinDev Canada and the Dutch cooperative Rabobank are each providing USD 20 million. ACA plans to use the cash as working capital in support of its exports of grains and seeds that it buys from cooperatives that represent 50,000 farmers. FinDev Canada is Canada’s development finance institution (DFI), supporting the private sector in developing markets to promote sustainable development.
Heads of G7 Export Credit Agencies Express Support for Ukraine
(UKEF, London, 22 January 2023) Acknowledging the G7 Leaders’ Statement on Support for Ukraine, as heads of the official export credit agency (ECA) schemes of the G7 nations – Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States of America – we wish to express our ongoing support for Ukraine and for its reconstruction efforts and our unwavering solidarity with the Ukrainian people for as long as it takes. Since Russia’s full-scale invasion of Ukraine, the G7 ECAs have remained open for underwriting Ukrainian business opportunities in solidarity with Ukraine during this difficult time. We also continue to participate in the wider dialogue with other ECAs and multilateral institutions, including within international fora such as the Berne Union, to find ways to enhance cooperation, share information and leverage our collective platforms to bring visibility to and stimulate support for Ukraine.
Canada and New Zealand map out pledges to axe ECA fossil fuel support
(Global Trade Review, London, 14 December 2022) Canada and New Zealand have mapped out how they will put into action pledges to scrap ECA support for fossil fuel projects, ahead of an end-of-year deadline. At last year’s Cop26 summit in Glasgow, thirty-nine countries vowed to end public finance backing for fossil fuels by the end of 2022, which theoretically bars ECAs and export finance institutions from providing fresh backing for such projects from January 1, 2023. Canada was the second-biggest public financier of fossil fuel projects in the G20 between 2019 and 2021. On the same day, EDC’s fellow ECA New Zealand Export Credit (NZEC) outlined a similar policy to cement its Cop26 commitment, including an end to support for fossil fuel exploration, extraction, transportation, storage and refining, as well as power plants and supporting infrastructure and services. Even for a party which is “in the fossil fuel energy sector” but carrying out an unrelated transaction, “applications may be considered only where that party has a documented and realistic transition plan consistent with a 1.5°C warming limit and the goals of the Paris Agreement [on combating climate change],” the NZEC policy says. The release of NZEC’s policy means there are only five governments that are yet to outline how they will meet their commitments to axing public finance for fossil fuels by the end of this year, according to Oil Change International: Germany, Italy, Portugal, Spain and Switzerland. Of these, Germany, Italy and Spain agreed earlier this year to publicise their plans to wind down ECA support for fossil fuels as part of the Export Finance for Future (E3F) alliance, but so far have not.
Canada to (mostly) stop subsidizing international fossil fuel projects
(Greenpeace, Toronto, 12 December 2022) Canada has joined the growing ranks of nations promising to end international financing of fossil fuels (though there are some worrisome exceptions). The Financial Post immediately warned that without taxpayer subsidies it would be more expensive for private companies to build new fossil fuel projects which… is the whole point of the exercise. The new policy applies across all federal departments, agencies and Crown corporations but will predominantly impact Export Development Canada (EDC), a Crown corporation with a long history of funnelling billions in support to the oil and gas industry. As of January 2023, EDC (and the rest) will have to stop funding (most) fossil fuel projects and redirect those resources to support the clean energy transition.
Heads of G7 ECAs meet in Toronto
(UK Government, Toronto, 3 November 2022) The leaders of the official export credit agencies from the G7 nations – Canada, France, Germany, Italy, Japan, United Kingdom and the United States of America – were hosted by Export Development Canada in Toronto, Canada to discuss a number of pressing geopolitical, economic and sustainability matters impacting exporters and global trade flows. Discussions examined how the G7 ECA Heads are moving their organizations forward on digitalization, climate change, inclusive trade, and how ECAs can serve as strategic accelerators for the growth of small- and medium-sized exporters. The G7 ECA Heads focused on the impacts of the Russia/Ukraine war on global supply chains, energy security, and how ECAs can support their exporters through turbulent times and how they can work together to support Ukraine as it rebuilds. The G7 ECA Heads are unified in their strong desire to heighten their relevance to their nations’ exporters and explored ways to accelerate collective efforts to modernize the OECD Arrangement on Officially Supported Export Credits. Acknowledging the themes expressed in the recent G7 Political Leaders’ Communique, the ECA Heads recognized the need for bold contributions to climate action and discussed alignment of shared climate policy obligations and ongoing efforts to support companies through the global energy transition. The next annual meeting of the ECA Heads will be held in Italy in 2023.
Canada 2nd in the G20 for fossil fuel subsidies
(The Saxon, Salisbury, ? November 2022) Canada continues to heavily subsidize fossil fuels despite its international commitments, according to a report by Oil Change International. The nonprofit estimates that Canada has, on average, given up to US$8.5 billion annually to projects related to this type of energy between 2019 and 2021. Among G20 countries, Canada is the second most publicly funded fossil fuel project. Only Japan spends more, with an annual average of US$10.6 billion. South Korea and China complete the front runners with US$7.3 billion and US$6.7 billion respectively in subsidies to the fossil fuel sector. France, Brazil and Germany lead the G20 in green energy subsidies, with US$2.8 billion, US$2.5 billion and US$2.2 billion, respectively. Canada, meanwhile, spends about US$800 million.
European countries back weakened ECA fossil fuel financing pledge
(Financial Management Magazine, Durham, 4 November 2022) As noted in our October What’s New, ten European countries had agreed to spell out this year how they will limit export finance support for overseas fossil fuel projects. But they shelved a draft pledge to explicitly end it after pushback from Italy. The final statement was weaker than a previous draft seen by Reuters. At the UN COP26 climate summit in November 2021, 39 countries and financial institutions, including the Netherlands, signed the Glasgow Statement on International Public Support for the Clean Energy Transition, committing signatories to end their direct international public financing for fossil fuels by the end of 2022, except in exceptional circumstances, and fully prioritize their public finance for clean energy transition. If all signatories followed through on their pledges with integrity, this could directly shift US$28 billion a year from fossil fuels to clean energy and help shift even larger sums of public and private money away from investments in climate-harming fossil fuels. International and Dutch NGOs now argue that the new policy published by the Dutch Government on restricting finance for fossil fuels has such significant loopholes, that it essentially means the Netherlands has reneged on its promise. The Dutch government said it intends to stop giving companies and banks credit insurance for exports in the fossil fuel sector as of Jan. 1, following through on a pledge made at the COP-26 climate conference in Glasgow. When the pledge was announced in 2021, the Cabinet said it did so knowing it would put Dutch exporters at a competitive disadvantage to exporters in countries that do still offer such insurance and the Finance Ministry said the Netherlands might reconsider the policy if other countries fail to adhere to their COP-26 pledges. According to Statistics Netherlands (CBS), petroleum and petroleum products made up 9.3% of Dutch exports in 2021, with a trade value of 54.7 billion euros. Around 20 countries including Germany, the United States, Britain and Canada made similar commitments, but only a few including France have so far implemented them into policy. On the other hand, Australia chose not to sign the Glasgow Statement at a public event held at Cop27 in Sharm el-Sheikh.
U.S. EXIM Bank, Ukraine pledge cooperation on financing, reconstruction
(Reuters, Washington, 30 August 2022) The head of the EXIM and a senior Ukrainian development minister have pledged to keep working on U.S. financing opportunities to support Ukraine’s energy security and infrastructure, the export credit agency said. The meeting between EXIM Chair Reta Jo Lewis and Ukrainian Minister for Communities and Territories Development Oleksiy Chernyshov came exactly a year after EXIM and Ukraine signed a memorandum of understanding to identify $3 billion in EXIM-supported export financing projects for Ukraine, including road, rail and energy infrastructure. In March, less than a month after Russia’s invasion started, EXIM and its fellow export credit agencies in Britain and Canada withdrew all new export credit support for Russia and Belarus.
France restricts oil & gas finance to meet climate commitments, piling pressure on Germany, USA, Canada to follow suit
(Oil Change International, Washington, 26 September 2022) the French Government has published a new policy that restricts public finance for fossil fuels from the French export credit agency, BPIFrance. This policy is meant to implement France’s commitment to end international public finance for fossil fuels by the end of 2022, which it made at the UN Climate Conference in Glasgow last year along with 38 other countries and financial institutions (The Glasgow Statement). The French Development Agency (AFD), which is also subject to the Glasgow commitment, had already adopted a near-complete fossil fuel exclusion in 2019. The policy – which will be enacted in law through the French Government’s budget – is a landmark win for French campaigners who have been calling for an end to French export finance for fossil fuel projects for years. In addition, it builds pressure on fellow Glasgow Statement signatories to keep their promise and announce their Glasgow-compliant policies by the upcoming COP27 UN Climate Conference in Egypt. So far, the United Kingdom, Denmark, Belgium, Sweden and now France have published policies to implement their Glasgow commitment. The new policy implements a commitment made at last year’s UN Climate Conference to end almost all French government-backed financing for international fossil fuel projects, responsible for €9.3bn in public finance for oil and gas between 2009 and 2019.
