High-Level Conference NET-ZERO BY 2050 THE ROLE OF EXPORT FINANCE
Organised by the Directorate-General for Trade, European Commission
Thursday, 25 April 2024, Thon Hotel EU, Brussels, with online participation
Agenda
• Session one – The Green Transition – Challenges for Export Finance
◦ Panel discussion. Representatives of the International Energy Agency, NGOS, business as well as the European Commission will present the context for export credits efforts towards alianment. and will discuss the challenges of the green transition for export finance.
• Session 2 – National export finance policies: Phasing out fossil fuels and scaling up clean energy
◦ Panel discussion. Representatives from ECAs and national governments will discuss approaches they have taken to support the transition to Net Zero by 2050. In Council Conclusions of 15 March 2022, each Member State committed to establishing a national plan to phase out any official support for fossil fuel related projects, while scaling-up clean energy. The panellists will present their national plans and their implementation, followed by a discussion.
• Session3 – International Cooperation on Export Finance and Climate
◦ Panel 3 will assess efforts made at an international level to align the worldwide export credits community with the climate objectives. Two international coalitions of ECAs will present their efforts and be joined by a representative of the European Commission among others.
• Wrap up & conclusion
(Ankura Consultants, 20 March 2024) The U.S. Export-Import Bank (EXIM) is among the most impactful government agencies when it comes to helping U.S. companies compete for business internationally, finance domestic manufacturing, and build resilient supply chains. Up until 2019, EXIM policies and products were little changed despite the U.S. economy evolving dramatically away from traditional manufacturing to a technology and services-dominated economy. As a result, EXIM users are calling for EXIM to be more relevant and adaptable to our 21st-century economy. Lawmakers are hearing these calls and becoming more receptive to EXIM reform. For example, in 2019, Congress gave EXIM a mandate to bolster U.S. company competitiveness concerning China. EXIM users applauded. More reforms are under consideration in Washington.
Five Key EXIM Bank Reforms proposed by Ankura in Washington:
- 1. Revise EXIM’s U.S. Content Policies to Reflect the Modern Global Supply Chain and Export Finance Environment.
- 2. Codify EXIM’s “Make More in America Initiative” (MMIA)
- 3. Raise EXIM’s 2% Statutory Default Limit and Exempt Technology, Nuclear and National Security Related Financings.
- 4. Modify EXIM’s Underwriting Criterion of “Reasonable Assurance of Repayment.”
- 5. Repeal or Modify EXIM’s Prohibition of Financing Sales of Defense Articles and Services
(UK Government, London, 19 March 2024) UK Export Finance (UKEF), the UK’s export credit agency, has signed a memorandum of understanding (MoU) with the U.S. Department of Energy Loan Programs Office (LPO). The agreement signals UKEF and the LPO’s interest in considering potential new joint financing opportunities for energy and green infrastructure projects. This is the first-ever MoU between a European export credit agency and LPO, which has closed over $30 billion in financing deals for energy and advanced technology vehicle projects in the last decade. Collaboration and co-financing with UKEF are expected to create new opportunities for British businesses of all sizes – including smaller firms – looking to support US energy and decarbonisation projects.
(Australian Financial Review, Washington, 8 March 2024) The Pentagon held discussions with Resources Minister Madeleine King about how it could co-invest in an Australian nickel project alongside the Australian government to help mitigate the impact of a glut undermining future critical minerals self-reliance. Ms King met with the under-secretary of defence for acquisition and sustainment, Bill La Plante, at the Pentagon on Thursday (Friday AEDT) to discuss options available following a collapse in the nickel price that has led to the closure and write-down of Australian projects. “The options around collaboration of government financing agencies with those out of America might be EXIM, or under the Defence Production Act,” she said. The Export-Import Bank is the export credit arm of the US federal government.
(ChemAnalyst News, New York, 7 March 2024) In a significant development, the UK government has committed to providing a financial guarantee of EUR 700 million to Ineos, led by billionaire Jim Ratcliffe, for the construction of Project One. This ambitious project is poised to become Europe’s largest petrochemical plant in three decades. While financial details emerge, environmental groups are gearing up for a legal battle to halt construction, labelling the plant a potential “carbon bomb” that could escalate emissions and contribute to plastic production and waste. The financial backing from the UK government for Ineos’ Project One comes to light amidst growing environmental concerns and impending legal challenges. Detractors of the project view it as a significant contributor to carbon emissions and a catalyst for increased plastic production and subsequent waste. These concerns have prompted environmental groups to prepare for legal action aimed at preventing the construction of the plant.
(Talk Business, Arkansas, 7 March 2024) International Women’s Day provides the opportunity to highlight the social, economic, cultural and political achievements of women and to address the diverse challenges women face every day. For the last 25 years, EXIM’s Minority- and Women-Owned Business division has been hard at work educating U.S. small businesses about the financial services available to help their businesses compete globally. In the last dozen or so years, this small, independent government agency that punches above its weight has provided over financing to about 1,000 women-owned businesses exporting to 150 countries. [Women face unique challenges both in the U.S. and globally, yet the entrepreneurial spirit of woman business owners and leaders remain inspiring, writes former Export–Import Bank of the United States (EXIM) CEO Kimberly Reed.]
(Yahoo Finance, New York, 1 March 2024) Gunvor Group Ltd., one of the world’s top oil traders, will pay more than $660 million to resolve US and Swiss charges that the company paid bribes to Ecuadorian government officials for contracts. The information released by the US is a reminder of the seedy deals made in the not-too-distant-past by some of the biggest firms in commodity trading, which have made billions of dollars in profits on energy market volatility stemming from the Covid-19 pandemic and then the invasion of Ukraine. A shortage of key resources has also seen these companies strengthen ties with governments around the world — just a few months ago, Italy’s export credit agency guaranteed a €400 million ($433 million) loan to Gunvor in return for supplying gas to the country.
(BNN Breaking News, Hong Kong, 29 February 2024) Environmental and human rights organizations have taken a stand against Standard Chartered, filing a complaint with Britain’s National Contact Point for Responsible Business Conduct (NCP) over the bank’s financial involvement in four coal-fired power plants in the Philippines. These groups, including the Philippine Movement for Climate Justice, Inclusive Development International (IDI), Recourse, and BankTrack, assert that the bank’s actions have led to detrimental impacts on local communities, including forced evictions, loss of livelihood, and health issues due to pollution. The complaint, lodged with NCP accuses Standard Chartered of failing to perform due diligence that could have prevented the adverse effects experienced by the communities surrounding the coal plants. The NCP, while lacking the authority to enforce action or compensation from Standard Chartered, plays a crucial role in investigating breaches of the OECD Guidelines for Multinational Enterprises. Despite the limitations of the NCP’s powers, the UK’s export credit agency UKEF has indicated that findings from such investigations will influence future decisions on supporting companies and banks involved in financing controversial projects.
(Pulse News, Seoul, 21 March 2024) The Korea Trade Insurance Corp. (K-SURE), an export credit agency, will provide the largest-ever trade insurance and financial support worth 250 trillion won ($187 billion) to achieve the government‘s target of $700 billion in exports this year. According to sources from the government and the trade industry on Wednesday, K-SURE plans to provide a total of 250 trillion won in support for short-term and medium- to long-term export insurance, export credit guarantees, and exchange rate fluctuation insurance this year.
(Bloomberg, 1 March 2024) Lenders to TotalEnergies SE’s Mozambique liquefied natural gas project are weighing the release of billions of dollars in funding as the company plans to resume construction three years after development was halted by Islamist insurgent attacks. The planned onshore facility designed to export the southern African nation’s major gas discoveries attracted the biggest project financing yet seen in Africa. That was before Islamic State-linked militant attacks near the site in 2021 prompted Total to evacuate its personnel and declare force majeure. The US Export-Import Bank, which committed the biggest share of $4.7 billion in financing — and other lenders that comprise a total of about $15 billion in debt — are conducting assessments on reactivating the funding. The assessment of whether to resume financing coincides with a decision by the Biden administration in January to pause approval of new liquefied natural gas export licenses, in recognition that the climate impact from the fossil fuel needs to be reassessed. The US Eximbank’s loan to the Mozambique project was initially provided in 2020, during the administration of former President Donald Trump. While Russia’s invasion of Ukraine sent Europe on a scramble for alternative energy supplies that boosted interest in upcoming LNG production, projects in nations across Africa are still susceptible to a range of issues including political instability and construction delays. Mozambique has the added obstacle of an insurgency that’s become subdued by armed forces, though the Islamist fighters still carry out sporadic deadly raids. Atradius Dutch State Business, the Amsterdam-based Dutch export-credit agency that’s committed $1 billion to Mozambique LNG, said it’s also assessing the situation. “Due diligence is currently ongoing to assess whether we can allow drawdowns under the loan,” it said.
