(UKEF, London, 27 February 2025) Scottish businesses have secured £42 million from UKEF since July, boosting economic growth and job creation. Companies like Ferguson Whisky and Emergency One are expanding into global markets. Aberdeen-based First Tech also received £12 million to grow its offshore wind market presence. The funding aligns with the UK government’s Plan for Change, aiming to strengthen Scotland’s export capabilities.
United Kingdom
UKEF offers new guarantee to help British firms secure international contracts
(New Civil Engineer, London, 19 November 2024) UKEF has launched a new product aimed at aiding British companies in securing international contracts. The Early Project Services Guarantee (EPSG) is the latest initiative to support firms offering engineering, design and technical services on a global scale. The EPSG is designed to assist overseas buyers who opt for British service companies in the initial planning phases of their projects. When an international buyer plans a major project and requires early work such as feasibility studies or conceptual designs, they can engage a UK design service firm. Under the EPSG scheme, this buyer can then seek a guarantee to secure a loan from a bank. This loan enables them to finance the early work provided by the UK business, with repayment terms spanning up to two years. Meanwhile, the UK service provider receives payment upon completion of services, contingent on the loan’s terms.
U.S. Misses the Mark on ECA Fossil Fuel Finance Agreement
(Friends of the Earth, Washington, 21 November 2024) Today at the conclusion of the OECD Export Credit Group negotiations, participating nations failed to reach an agreement on fossil fuel finance, despite scientists’ repeated calls for urgent climate action. While no formal conclusion has been announced from the talks, the United States appears to have failed to secure an agreement. The proposal has already been championed by the European Union, UK, Canada, Norway and most recently, Australia. It would have potentially restricted financing for the entire fossil fuel value chain. Up to $40 billion per year could be shifted away from fossil fuels to renewable energy projects. This would have paved the way for the agreement to be presented as part of a climate finance package at COP29. Unlike the Paris Agreement, it would have been difficult for the Trump Administration to remove itself from just one piece of the arrangement.
Does Italian ECA stifle Mozambique LNG atrocities?
(Barrons/AFP, Paris, 15 November 2024) French energy giant TotalEnergies, recipient of Italian (& French?) ECA funding, was aware of accusations of abuses committed by soldiers charged with protecting its gas site in Mozambique as early as 2021. “Complaints of extortion, disappearances and even violence leading to the deaths of two fishermen are recorded in quarterly social reports written by teams of Mozambique LNG,” TotalEnergie’s subsidiary in the country, according to Le Monde. The reports were sent to the Italian export credit agency SACE, from which an Italian NGO, ReCommon, and Le Monde obtained them under a right of access to information legislation. TotalEnergies used hired guards of the local affiliate of UK security firm G4S linked to a former liberation figure and ex-minister of security in the 1980s. ECA-Watch noted in 2016 that Korean, French, Italian and Chinese ECAs were set to play a key role in the financing of two LNG projects planned in the north of Mozambique despite widespread concerns about gross human rights violations by local authorities.
UKEF signs £4bn air defence deal with Poland
(Financial Times, London, 7 November 2024) Britain has agreed a £4bn air defence deal with Poland, the largest-ever export contract between the two countries, in the wake of Russia’s invasion of Ukraine. The UK will equip Polish forces with a ground-based air defence system capable of countering threats such as cruise missiles and fighter jets at ranges of more than 40km. The system, known as the Common Anti-Air Modular Missiles — Extended Range or CAMM-ER, is manufactured by European missile maker MBDA. MBDA is owned by BAE Systems and Airbus, both with a 37.5 per cent stake, with Italy’s Leonardo holding the balance.
UK approves use of export finance to source critical minerals
(Innovation News, London, 31 October 2024) UK Export Finance (UKEF), the government’s export credit agency, will offer financial support for overseas projects to source critical minerals. Securing contracts that increase the UK’s ability to source critical minerals will help the UK build economic resilience and lower the risk of supply-chain disruption in major industries like automotive, defence, and aerospace. Critical minerals are raw materials like lithium, graphite, and cobalt, which are essential to the UK’s largest export sectors. They are used in emerging and sustainable technologies like electric vehicles, solar panels and wind turbines.
Cutting Fossil Fuel Financing
(Friends of the Earth, Merrifield, 4 October 2024) Fossil fuel companies continue to be propped up by the government in the form of public financing like US EXIM. Often, these tax dollars are funding overseas fossil fuel projects wreaking havoc on our environment and local communities in places like Mozambique, India, Bahrain, Papua New Guinea — to name a few. At the 2021 United Nations Climate Change Conference (COP26) in Glasgow, more than 30 countries signed a commitment to end international public finance for fossil fuels and to prioritize funding for clean energy. If implemented fully, this resolution could shift $28 billion a year from fossil fuels into clean energy. In particular, the UK’s ECA (UK Export Finance) cut its fossil fuel transactions from $11 billion to zero in just ten years. Previously, the agency had allocated more than 99% of its energy finance to fossil fuels. We have also seen great success pressuring other countries but the United States is the biggest violator of the COP26 commitment. In 2023 and, so far, in 2024, the US provided $3.5 billion for overseas fossil fuel projects. The US EXIM alone just approved financing for six mega-projects, including $500 million to develop 300 oil and gas wells in Bahrain. The US is the largest member of the coalition of signers and is the biggest problem. We will continue to pressure our export credit agencies to take this commitment seriously and accept responsibility and the largest historical climate polluter.
UK Steps Up Export Deals to French-Speaking Africa as has China
(BNN Bloomberg, Toronto, 7 September 2024) The UK has stepped up business in French-speaking West and Central Africa as it seeks new frontiers for its exports. UKEF was backing transactions in francophone Africa worth a cumulative £1 billion ($1.3 billion) at the end of the 2023-4 financial year, up from just £3 million in 2017-8. These countries now represents about 13% of UKEF’s portfolio on the continent. Meanwhile, China’s export credit agency Sinosure is increasingly dominant. China’s Sinosure has backed projects to support the country’s Belt and Road Initiative, a global development push that brought more than $120 billion of Chinese construction contracts and investments to Africa in its first 10 years, according to a study by the Green Finance and Development Center at Shanghai-based Fudan University. China is not bound by the same rules as the UK and France, which are members of the OECD. The OECD has in the past few years made it easier for ECAs to cover costs in the recipient’s country. Both UKEF and Bpifrance Assurance Export require at least 20% of a transaction’s value to come from businesses in their country.
UKEF pushes Titanic builder Harland & Wolff into administration
(Splash 247, Singapore, 17 September 2024) Harland & Wolff, the owner of the Belfast shipyard that built the Titanic, has announced that it will be entering into administration this week after failing to find new funding following the UKEF rejection of the company’s request for a £200m facility. The company said its request for a £200 million (US$260 million) loan from the UK government’s export credit agency UK Export Finance had been had been rejected, leaving it in financial trouble.
The real effects of trade financing by export credit agencies
(Centre for Economic Policy Research, London, 9 February 2024) Trade finance subsidies, usually provided by export credit agencies, are the predominant tool of industrial policy. This column discusses the effect of the effective shutdown of the Export–Import Bank of the US (EXIM) from 2015—2019 on firm outcomes. It finds that firms which previously relied on EXIM support saw a 18% drop in sales after the agency closed, driven by a reduction in exports. Firms affected by the shutdown also laid off employees and curtailed investment. Overall, export credit subsidies can boost exports even in countries with well-developed financial markets, without necessarily leading to a misallocation of resources.
