(International Institute for Sustainable Development, Winnipeg, 27 August 2024) Countries are underdelivering on fossil-to-clean energy finance pledge. This report analyzes the progress made by Clean Energy Transition Partnership (CETP) signatories on shifting international public finance away from fossil fuels and into clean energy. It finds that although significant progress has been made on cutting finance for fossil fuels, signatories are not increasing renewable investment at the same scale. At the United Nations Climate Change Conference (COP) in November 2021, 39 countries and public finance institutions signed the Clean Energy Transition Partnership (CETP), a joint commitment to end international public finance for fossil fuels by the end of 2022 and prioritize international public finance for clean energy. To realize the CETP’s transformative potential, new policies are needed to boost clean energy financing. All high-income signatories need to review and update their policies! The Financial Times notes that a group of more than 30 countries cut public funding for fossil fuel projects overseas by up to $15bn last year, a report has found, although the US has continued to pour billions into oil and gas finance.
ECAWatch Newsletter 8
Cesce backs green loan for Iberdrola renewable expansion
(Global Trade Review, London, 5 August 2024) Spain’s export credit agency Cesce has agreed to cover a €500mn green syndicated loan for Iberdrola, backing its renewable expansion plans globally. The 15-year facility will help fund solar photovoltaic, wind and battery projects in the US, Italy and Australia. The total renewable capacity financed will reach 897MW and is expected to be operational between 2025 and 2026,” Iberdrola says. The facility furthers the Spanish energy company’s goal of diversifying its financing pool and brings its overall volume of export credit agency (ECA)-covered loans to a total of €2.5bn, it says. Last year, Norway’s ECA guaranteed a €500mn loan from Citi for a wind farm off the UK coast.
Arab oil and gas sector attracted investments worth $406bn over 22 years
(Arab News, Jeddah, 7 August 2024) RIYADH: Arab nations have attracted $406 billion in investments from 356 foreign and regional companies in the oil and gas sector over the past 22 years, according to recent data from the Arab Investment and Export Credit Guarantee Corp., also known as Dhaman. During this period, which spans from January 2003 to May 2024, the region has seen the execution of 610 projects. The US has emerged as the leading investor, with 85 projects representing approximately 14% of the total. In terms of investment costs, Russia has taken the lead, contributing $61.5 billion, which constitutes about 15.2% of the total investment. The Middle East remains the largest holder of proven oil reserves globally. As of 2023, it accounts for approximately 55.5% of the world’s known oil reserves, according to the global statistics platform Statista. However, the region’s share has declined from nearly 63% in 1960 to less than 56% by 2020. Future projections indicate a continued decline in proven oil reserves in the Arab region. In other news Saudi Arabia is investing in a gigantic Red Sea tourism alternative to oil, with a $3.8bn loan raised by the Saudi government-owned Red Sea Development Company. Due for completion in 2030, the so-called ‘giga-project’ will spread across 22 of the 90 islands that form an archipelago off Saudi Arabia’s west coast, as well as inland, and offer 50 hotels with 8,000 hotel rooms. The first ECA green loan in Saudi Arabia was a $258m loan last year that German credit insurer Euler Hermes structured alongside Crédit Agricole CIB and HSBC. The proceeds were for the Ministry of Finance to acquire 842 buses for the new Riyadh public transport network from Daimler’s bus subsidiary in Germany. Another ECA loan covers the purchase of 50 electric vertical take-off and landing (eVTOL) jets from Lilium GmbH under a Saudi Export Import Bank export credit insurance policy supporting Saudi non-oil trade.
UKEF to finance Cambodia’s infra for exports
(Khmer Times, Phnom Penh, 7 August 2024) The UK Export Finance (UKEF), a United Kingdom government ministerial department and the nation’s export credit agency, Tuesday expressed the willingness to finance Cambodia’s infrastructure projects and public services to attract investment from the British. The UKEF delegation was on a three-day mission from August 5-7 to explore opportunities for strengthening cooperation under the export finance framework in Cambodia. The Head of UKEF appreciated the efforts of the working groups which led to the development of all sectors across the country, especially the public infrastructure sector, a key to support the socio-economic development of Cambodia. “As part of the International Development Strategy, the UK Government is committed to supporting Cambodia’s socio-economic development by promoting investment in infrastructure and public services.”
Canada’s EDC nursing steep losses from billions loaned to Thames Water
(Water Briefing, London, 10 August 2024) Canada’s state-backed export credit agency is reportedly nursing steep losses after lending debt-ridden Thames Water as much as a billion Canadian dollars. The British utility, which has said it could run out of cash by next June, received five loans from Export Development Canada (EDC) between 2018 and 2022 after the Canadian pension fund Omers had invested. The total value of the loans was between C$750m and C$1.45bn (between £422m and £820m), EDC said, while declining to give an exact figure. EDC sold the loans at a deep discount in recent weeks, according to the Financial Times, which cited unnamed investors. EDC declined to comment on whether it had lost money. A spokesperson said: “EDC has been carefully following the recent challenges encountered by the utility and with the regulator’s recent determination and Omers’ decision to write down its stake, we are assessing the best course of action to manage our loan exposure with the company.
The BRICS come of age [But what role for ECAs?]
(Project Syndicate, Cairo, 18 August 2023) by Hippolyte Fofack, Chief Economist and Director of Research at the African Export-Import Bank (Afreximbank). Given the BRICS’ economic success, more than 40 countries have shown an interest in joining the group and 22 have formally applied for membership. Expansion, trade and investment facilitation will be high on the agenda of the group’s summit scheduled for August 22-24 in Johannesburg. They include many issues on which the bloc’s views diverge from those of the G7, such as sustainable development, global governance reform (especially reform of the IMF), and de-dollarization. An enlarged grouping could deepen trade and settlement in local currencies, accelerate de-dollarization, and lead the transition to a more multipolar world. The economic potential of Brazil, Russia, India, and China, the group – called the BRICS since the addition of South Africa – contributes more to global GDP (in purchasing-power-parity terms) than the G7. Since 2014, Russia’s trade with G7 countries has fallen by more than 36%, owing to unprecedented Western sanctions, while its trade with the other BRICS has increased by more than 121%. The International Monetary Fund forecasts that China and India alone will generate about half of global growth this year. With geopolitical tensions running high, and the weaponization of the dollar for national-security purposes continuing to escalate, the BRICS have taken on new significance, offering trade diversion and other relief to weaken the effectiveness of sanctions and fast-tracking the transition to a multipolar world. Read the Summit Declaration here.
Four Emirati women lead UAE’s powerful financial institutions
(Gulf Business, Dubai, 28 August 2023) With a career spanning nearly two decades, Raja Al Mazrouei joined Etihad Credit Insurance (ECI) as a board member in January 2022 and became the export credit agency’s managing director and CEO in November 2022 and January 2023, respectively. Other women recognized on Emirati Women’s Day include: Hana Al Rostamani, Group CEO, First Abu Dhabi Bank; Rola Abu Manneh, CEO, Standard Chartered UAE and Maryam Buti Al Suwaidi, CEO, Securities and Commodities Authority
UKEF to provide £192m loan guarantee to boost Ukraine nuclear capabilities
(Sky News, London, 23 Augut 2023) Energy secretary Grant Shapps has visited Ukraine to announce fresh financial support for its nuclear fuel supply in a bid to end its reliance on Russia. The UK will provide a £192m loan guarantee to Ukraine’s national nuclear company, Energoatom via the UK’s export credit agency, UK Export Finance. Through the deal, UK-headquartered Urenco will supply Energoatom with uranium enrichment services that are vital for nuclear fuel, with nuclear power generating over half of the country’s electricity. The government hopes this will strengthen Ukraine’s energy security and help end the country’s dependence on nuclear services and nuclear fuel from Russia, as well as further isolate Vladmir Putin.
New Chinese growth drivers sought to boost exports amid weak global demand
(China Daily, Beijing, 9 August 2023) China’s foreign trade grew steadily in the first seven months of the year but exports in July declined at a steeper-than-expected pace amid subdued global consumer demand, which highlights the need to roll out stronger policy steps to further boost the country’s foreign trade, experts said on Tuesday. Li Dawei, researcher at the Chinese Academy of Macroeconomic Research’s Institute for International Economy, said the authorities should offer services such as exchange rate hedging, process export tax rebates faster, expand the scale of export credit insurance services and enhance customs clearance to foster new drivers of export growth amid falling global demand for the country’s traditional export products such as electronic items, clothing and footwear.
India’s Reliance Jio ties up $2.2 bn funding from Sweden’s EKN for 5G equipment
(Business India Today, Noida, 6 August 2023) “Reliance and its subsidiary Jio Infocomm JIL tied up its first ever Swedish Export Credit Agency (EKN) supported facilities of $2.2 billion equivalent making it the largest cover ever provided by EKN for a deal to a private corporate globally,” Reliance Industries said, adding that the proceeds of the facilities shall be utilised to finance the equipment and services in relation to JIL’s pan-India 5G roll out. Jio has committed to an investment of Rs 2 lakh crore to fulfill its ambitious pan-India 5G rollout plan, the company said. Jio started 5G network rollouts in October 2022. “Jio has launched its True 5G services across 2,300-plus cities/towns as of March 2023 and targets to achieve pan-India coverage by December 2023,” the annual report said.
