(E&E News, Arlington, 17 June 2024) The fate of an international plan to end a major funding source for fossil fuel projects could be decided this week by U.S. officials. Some of the world’s richest countries will meet behind closed doors starting Monday to discuss a European Union-led proposal to end loans and guarantees from their export credit agencies to oil and gas projects. It’s part of an evolving arrangement under the Paris-headquartered Organisation for Economic Co-operation and Development — a group of 38 countries that collaborate on issues of trade and finance — and follows a 2021 deal to end such investments in coal. If the countries under the arrangement reach a new agreement, it could help squelch the flow of billions of dollars into polluting energies. If they don’t, the proposal could get punted to the next round of talks in November, when former President Donald Trump, the presumptive Republican nominee for president, could be re-elected — which would threaten any agreement to restrict fossil fuel investments. “All eyes are on the U.S.,” said Kate DeAngelis, deputy director of international finance at the climate advocacy group Friends of the Earth. “Without the U.S coming to the table, we’re not going to see Japan and Korea get in line. And so I think if nothing happens, then that’s telling in and of itself that it’s a failure of U.S. leadership.”
ECAWatch Newsletter 6
SMEs should make more use of UKEF’s little-known GEF
Daily Business Group, London, 5 June 2024) Smaller firms and banks are being urged to make more use of the General Export Facility (GEF), a relatively unknown but valuable government scheme. It is designed to boost Britain’s SME exports by providing an 80% guarantee to banks for loans to businesses specifically engaging in exports. GEF is one of several export finance initiatives overseen by the government’s Export Credit Agency which in 2023 provided around £6.5 billion of financial support to UK exporters.
Nigerian Civil societies urge China to rescind proposed East African crude pipeline project
(Nigerian Tribune online, Ibadan, 26 June 2024) Civil society organisations have called on the Chinese government to rescind its decisions to build crude oil pipeline across East African countries. In an open letter to the Chinese Embassy’s Charge d’affaire Zhang Yi, Smith Nwokocha of StopEACOP Nigeria called on China to stand with people on the right side of history and not finance the EACOP projects. He explained that as a local civil society organisation working alongside people who directly and indirectly have been or will potentially be impacted by the East African Crude Oil Pipeline project and the associated upstream oil projects (the EACOP projects) in Uganda, Tanzania, and the Democratic Republic of the Congo (DRC), together, and alongside partners across the world, operate as the StopEACOP Coalition. “China’s reported support is in stark contrast with the assessments of major global financial institutions, and as a result is being seen as the last resort for saving these deeply controversial projects. As of 26 June 2024, 28 insurance and reinsurance companies, 4 Export Credit Agencies, 27 commercial banks and the African Development Bank have publicly ruled out support for EACOP.” “Several have explicitly attributed their decision to concerns over EACOP’s ongoing and anticipated environmental and social impacts. For example, Standard Chartered Bank, which was considering financing the project, ultimately declined to do so after conducting an environmental and social due diligence assessment.” “A range of studies by various independent experts, international organisations, as well as local civil society organisations that support the project affected people, have shown that the EACOP project and the associated Tilenga and Kingfisher oil field projects will bring high risks to climate, biodiversity, and RAMSAR wetlands, as well as the livelihoods of local communities and sustainable development of our countries.”
Brazil’s Petrobras tightens ties with Chinese banks and Sinosure
[BNAMERICAS, Santiago, 10 June 2024) Brazil’s state-run oil company Petrobras is tightening its financial ties with China. The federal oil giant’s actions in this area have gathered momentum since the beginning of 2023, when President Luiz Inácio Lula da Silva assumed the country’s presidency. Last year, Petrobras signed MOUs with China Development Bank (CDB) and Bank of China to assess investment opportunities and cooperation in low carbon initiatives and green finance. Last week, the company announced it had signed an MOU with China’s export credit agency Sinosure, with the same goals. The deal with Sinosure followed a series of agreements inked with Chinese companies such as China Petrochemical Corporation (Sinopec), China National Offshore Oil Corporation (CNOOC), China Energy International Group and Citic Construction Co. (CITIC).
UKEF’s implementation of the Equator Principles (1 April 2023 to 31 December 2023)
(UKEF, London, 25 June 2024) UK Export Finance (UKEF) adopted the Equator Principles (EPs) on 31 March 2016, joining what now comprises 128 other banks and Export Credit Agencies (EP Financial Institutions or EPFIs) in applying this global guidance for environmental, social, and human rights (ESHR) risk management when financing projects. During the reporting period 1 April 2023 to 31 December 2023, UKEF contributed to the planning and management of the mid-year workshop and celebration event that was held in London to mark 20 years of the Equator Principles. UKEF continues to follow the OECD Recommendation on Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence (OECD Common Approaches), currently dated 25 March 2024, which applies alongside the Equator Principles as outlined in the Policy and Practice on Environmental, Social and Human Rights due diligence and monitoring (ESHR Policy). The report lists projects supported within the scope of the Equator Principles and provides links to documents on social impacts, social risks, project-related human rights and sustainability.
U.S. EXIM Bank in an Age of Great Power Competition
(Center for Strategic and International Studies, Washington, 18 June 2024) The U.S. Export-Import Bank (EXIM), the United States’ official export credit agency (ECA), is an independent, executive branch institution that supports U.S. businesses by financing the exports of goods and services. EXIM creates jobs at home and has been an important national security instrument. From 2015 to 2019 the bank was dormant due to the absence of a board quorum and the lack of a reauthorization of its charter from the U.S. Congress. During the last 15 years, EXIM, once the global ECA gold standard, has been underutilized as it has struggled politically. Over this same period the global export credit landscape has evolved significantly, with governments around the globe using their ECAs more as instruments of industrial policy and to strategically boost their manufacturing competitiveness and strategic influence in critical emerging and frontier markets. Most notable in its ascendance as a global export credit player, the People’s Republic of China (PRC) has become a much bigger player in the space. At the same time, U.S. allies (and sometimes economic competitors) have also elevated their ECAs’ competitiveness and influence by offering more flexible terms and becoming more client-oriented compared to EXIM. As a result, EXIM not only has lost its global leadership position, but now is at a significant competitive disadvantage compared to its competitors, including the PRC, in the ECA space. The U.S. EXIM bank will need a new slate of board members in January 2025, as three of the four current board members’ terms end January 20, 2025, and EXIM faces a reauthorization in 2026, offering an opportunity to rethink what tools and capabilities EXIM should have.
JBIC fires up US$1bn loan for Australian LNG project
(Global Trade Review, London, 4 June 2024) Perth-headquartered Woodside Energy has secured a US$1.45bn loan package from Japan’s export credit agency and a group of private lenders, backing an LNG development off the Australian coast. As part of the deal, the Japan Bank for International Cooperation (JBIC) is providing a US$1bn loan that Woodside will use for its Scarborough Energy Project, which is slated to start delivering LNG by 2026. The facility will ensure a long-term and stable supply of LNG for Japan, says JBIC in a statement.
Export credit and West vs Chinese strategic minerals
(Mining News, Perth, 19 June 2024) Australian Strategic Materials (ASM) is aiming to become the first global company to go from rare earths mining all the way through to metals. Rare earths are considered critical minerals and demand is set to surge, making ASX-listed ASM well-placed to capitalise as it holds holds one of the country’s most advanced rare earth element deposits, the Dubbo Project, in New South Wales. ASM made significant headway in this area when it recently received non-binding letters of interest from the Export-Import Bank of the United States (US EXIM) for up to US$600 million, and up to A$400 million from Export Development Canada (EDC) in debt financing for the Dubbo Project, in addition to conditional finance support of A$200 million previously received from Export Finance Australia. Interest from US and Canadian agencies stems from enhanced policy alignment between Australia and North American jurisdictions on the importance of establishing an alternative critical minerals supply chain. “They needed a non-China source of material, so for us, being an early leader in it means we’re now in this process where we’re validating our product with all of them to qualify to be a supplier,” ASM Director Rowena SmithSmith said.
SACE EUR 100mln Push Facility provided to Eastern & Southern African Trade & Development Bank
(Zawya, Nairobi, 23 June 2024) The Eastern and Southern African Trade and Development Bank Group (TDB Group), SMBC Group (SMBC), Citi, and SACE are pleased to announce a EUR 100 million SACE Push Facility. This syndicated facility aims to support TDB’s mission of fostering regional growth and integration, while increasing Italian procurement through the involvement of TDB and its clients. The facility aims to support various sectors across TDB’s member countries, promoting economic growth, job creation, and sustainable development. By encouraging the involvement of Italian companies in projects within member states, the agreement will foster cross-border cooperation and economic integration in alignment with the African Continental Free Trade Area (AfCFTA) and the Sustainable Development Goals (SDGs).
India mulls overhaul of trade finance market
(Global Trade Review, London, 5 June 2024) India’s government has commissioned a wide-ranging review of the country’s trade finance sector, including examining the role of export credit agencies and the possible introduction of laws recognising digital trade documents. The Ministry of Commerce and Industry believes a lack of trade finance is holding India back from achieving its target of exporting US$2tn-worth of goods and services by 2030, more than double last year’s figure of US$765.6bn.
