(Swiss Climate Rambles, Berkely, 23 September 2024) According to its own website, the Swiss government’s export risk insurance agency SERV (Swiss Export Risk Insurance) has approved insurance for 7 gas projects with a total delivery value of CHF 3,375 million (or US$3,967 million at the current exchange rate) since the CETP took effect. The fossil fuel projects which SERV insured in 2023 and 2024 are listed in the following table. (Their delivery value may be larger than the value insured by SERV.) Switzerland is also the only country which has explicitly weakened its CETP policy. In March 2023, SERV pledged to end all its fossil fuel finance, with exemptions only for projects in line with the Paris Agreement’s 1.5°C goal. In July 2024, Oil Change International revealed that the agency had quietly watered down its policy by allowing SERV to fund any gas project it considers is in the “economic, foreign, trade & development policy interests of Switzerland”.
ECAWatch Newsletter 9
Rich countries could raise $5tn of climate finance a year, study says
(Guardian, London, 24 September 2024) Rich countries could raise five times the money that poor countries are demanding in climate finance, through windfall taxes on fossil fuels, ending harmful subsidies and a wealth tax on billionaires, research has shown. Developing nations are asking for at least $1tn (£750bn) a year of public funds to help them cut greenhouse gases and cope with the impacts of extreme weather. Research by the pressure group Oil Change International, published on Tuesday, shows that rich countries could generate $5tn a year from a combination of wealth and corporate taxes, and a crackdown on fossil fuels. A wealth tax on billionaires could generate $483bn globally, while a financial transaction tax could raise $327bn. Taxes on sales of big technology, arms and luxury fashion would be another $112bn, and redistributing 20% of public military spending would be worth $454bn if implemented around the world. Stopping subsidies [from OECD ECAs?] to fossil fuels would free up $270bn of public money in the rich world, and about $846bn globally. Taxes on fossil fuel extraction would be worth $160bn in the rich world, and $618bn globally.
Shifting and unlocking trillions for a just energy transition
(Oil Change International, Washington, 24 September 2024) Rich countries can mobilize well over $5 trillion a year for climate action at home and abroad by ending fossil fuel handouts, making big polluters pay, and changing unfair global financial rules. This briefing, endorsed by 36 civil society organizations, is published as global leaders meet at Climate Week NYC and the United Nations General Assembly ahead of COP29, where leaders must agree on a new global climate finance target (NCQG). This target must be at least $1 trillion annually in grants and grant-equivalent finance and is essential for countries to deliver last year’s commitment to transition away from fossil fuels. Only strong finance targets will unlock strong national climate plans (NDCs) due in 2025 that phase out fossil fuels. A new Oil Change briefing reveals how governments in North America and Europe are preparing to waste hundreds of billions of taxpayer dollars on these ineffective technologies, further benefiting the fossil fuel industry, despite their record profits. They add that carbon capture has a 50-year record of failure and ask why governments [and ECAs] are throwing billions of dollars at it?
Deutsche Bank & ECAs finance $3.1 billion Indonesian fossil fuel project
(Risk Net, London, 26 September 2024) Last year, Deutsche Bank was selected as sole hedge co-ordinator and hedge arranger for a landmark $3.1 billion project-financing deal in Indonesia. Deutsche Bank declined to say who the client was, only that it was a processing and petrochemical company that wanted to modernise and expand an oil and gas refinery in the country. The project is part of Jakarta’s strategy for reforming the country’s oil and gas sector. Indonesia’s economy remains heavily dependent on oil and gas, and yet for several years has imported far more of the commodity than it has produced. The $3.1 billion project-financing deal was one of the largest ever done in Indonesia, involving three export credit agencies and 22 commercial lenders.
Critical Minerals Security Partnership may not be enough for Australia
(Australian Strategic Policy Institute, Canberra, 25 September 2024) Fourteen countries this week took what they intended to be a big step in countering China’s dominance of critical minerals supply. But it’s unclear whether the initiative will restore competitiveness of Australian production and investment in the face of massive subsidies offered by China and, in response, the United States. The Minerals Security Partnership, a coalition of 14 countries, including the G7, Australia, India, South Korea, and European Union members, announced plans for a finance network to boost investment in critical metals. The initiative will tap into domestic export credit agencies and development finance institutions to attract private sector capital to produce, extract, process and recycle critical minerals, especially in riskier markets. The partnership seeks to lower investment risks and drive global supply chain resilience by providing guarantees and concessional financing. Australia’s economic prosperity and national security are intrinsically linked to the exploitation of its abundant resources, notably critical minerals. These minerals are the new oil. They’re the building blocks for everything from emerging technology to energy transition. Although Australia has vast reserves, its critical mineral mining and processing are still threatened by the intense subsidy war between the US and China.
Export Finance for Future (E3F) and accountability
(LinkedIn, Sunnyvale CA, Unknown date) An international coalition working to harness public export finance as a key driver in the fight against climate change. [ECA Watch note: Unfortunately E3F uses the LinkedIN professional network which relies on professional contacts, does not display dates for postings, and uses a format which is much less public than web page or Facebook networks, thus much less open to public information sharing and accountability.] E3F was launched by 7 European countries at ministerial level in April 2021 to align public export finance with climate goals. More specifically, the coalition aims to increase support for sustainable and climate-friendly projects and accelerate the progressive phasing out of fossil fuel related projects. With this, the coalition members, currently composed of the governments of Belgium, Denmark, Finland, France, Germany, Italy, the Netherlands, Spain, Sweden and the United Kingdom, reaffirm their commitment to contribute to the climate goals of the Paris Agreement and to promote consistent international standards and pursue ambitious multilateral action. All current members are also signatories to the COP26 statement on international public support for the clean energy transition. From the E3F LinkedIn page: “Denmark is pleased to announce that Denmark will take over the chairpersonship of the Export Finance for Future (E3F) Coalition for the coming year. The coalition warmly thanks Germany for their efforts and for successfully steering E3F through the last year, maintaining our commitments and ambition through the energy crisis. There is a solid foundation for moving E3F further, and Denmark looks forward to taking up the mantle. The focus for the coming year will be on ensuring the continued credibility and increasing the visibility of the coalition, fostering dialogue with non-members and stakeholders, deepening the coalition and strengthening the coherence with other government initiatives.” German NGO World Economy, Ecology & Development (WEED) has urged Denmark within E3F to “push all members to adopt ambitious local stratgies to end export finance for fossil fuels! – where Germany failed during their chairpersonship!”
Could ECAs finance cleaner steel & industrial hubs?
(Clean Technica, Bradenton FL, 15 August 2023) The climate finance community should be watching Sweden. Swedish steelmaker H2 Green Steel (H2GS), founded in 2020 to produce (using renewable hydrogen), is completing a landmark €5 billion+ fundraise for its first plant in Boden, near the Arctic Circle in northern Sweden, an industrial project finance template is taking shape and it’s important: heavy industry produces 30% of global carbon emissions and steelmaking is 7% alone. Export credit agencies may be less nimble than private lenders, due to the government oversight and political constraints they must operate within. But for these first-of-a-kind deals, they are proving to be powerful allies, both as debt guarantors and direct lenders. In the H2GS deal, Swedish ECA Svensk Exportkredit participated in the €3.3 billion senior debt tranche alongside commercial banks. Meanwhile, the core ECA, Allianz-owned Euler Hermes, committed to guaranteeing €1.5 billion of the senior debt.
US Exim approves first domestic manufacturing deal
(Global Trade Review, London, 5 September 2023) The Export-Import Bank of the United States (US Exim) has approved the first transaction under its domestic manufacturing programme, a direct loan of US$4.7mn to a Pennsylvania-based technology firm. The transaction comes more than a year after US Exim formally launched its Make More in America Initiative (MMIA), which in the time since has made available the agency’s range of medium and long-term loans for the establishment or expansion of US-based manufacturing facilities with an “export nexus”. US Exim had been recommended to explore the possibility of creating such a product a year earlier, following a 100-day White House review of supply chains for critical products, such as minerals and semiconductors.
FSD Africa Investments Pledges $19.5 Million to Fortify Africa’s Climate Resilience
(Techinafrica, South Africa, 8? September 2023) [A somewhat confused article apparently about an investment in un-named Latin American ride sharing services by an African investment fund backed by un-named ECAs.] “To enhance mobility and environmental sustainability in Latin America, FSD Africa Investments (FSDAi) [a UK International Development funded regional programme operating in more than 30 countries from its Kenya base] has forged a significant alliance with the [South African] ride-hailing service [app] InDrive.” [An Uber cum taxi competitor now operating in 6 other African countries]. FSDAi’s investments in Acre Impact Capital’s Export Finance Fund I, the Catalyst Fund, and Camco’s Spark Energy Services underscore the institution’s commitment to collaborating with local investment managers and venture capitalists. The goal is to champion environmentally-conscious enterprises that might otherwise face challenges securing the necessary capital. [Support for privately owned automobile services is environmentally conscious?]
Hungary Exim wins World Bank support for ING loan
(Global Trade Review, London, 13 September 2023) The Hungarian Export-Import Bank (Hungary Exim) will boost sustainable lending after securing a €300mn loan extended by investment bank ING and covered by the investment insurance arm of the World Bank. The World Bank’s Multilateral Investment Guarantee Agency (Miga) issued €386mn in guarantees to ING, covering the Dutch lender’s principal, interest and other financing costs on the debt. Hungary Exim says it will use the credit line to launch new green financing products and primarily to support SMEs, although some “larger” sustainable projects may also benefit.
