(Business Standard, New Delhi, 31 August 2021) Exim Bank of India has extended a line of credit of $100 million on behalf of the Indian government to the Africa Finance Corporation (AFC) to develop infrastructure in the continent and boost economic revival of countries in the region, infrastructure required for the revival of Africa’s economies in the wake of the COVID-19 pandemic.
ECAWatch Newsletter 9
Aligning export finance to sustainable development goals
(Bizcommunity, Cape Town, 23 September 2021) A clear call to action to rethink the sustainability performance of the export finance market has come out of an International Chamber of Commerce (ICC) white paper. Released at a major event during United Nations (UN) General Assembly week and developed with the support of the Rockefeller Foundation and 16 leading banks, the white paper explores how the US$700bn export finance industry can significantly increase its contribution to the achievement of the UN Sustainable Development Goals (SDG) and the Paris climate accord.
Swedish ECA launches Green Guarantee to promote climate investments
(EKN, Stockholm, 15 September 2021) EKN launches a new credit guarantee to facilitate financing of green exports as well as green transition projects within Swedish exporting companies. The new guarantee covers the bank’s risk up to 80 percent instead of previously 50 percent, which increases the capacity for credit. It is offered to companies with direct or indirect exports that contribute to the climate transition. The assessment criteria’s will be based on the EU-taxonomy. EKN’s Green Guarantee covers both working capital and financing of a specific investment, in businesses contributing to the climate transition. In addition, a Scientific Climate Council, a group of academic experts, will provide advisory support to the Swedish Export Credit Agency (EKN) and the Swedish Export Credit Corporation (SEK) to assist aligning the Swedish export finance system with the Paris Agreement’s 1.5°C goal, according to a SEK press release. The climate council is the first of its kind in the world and will focus on issues such as the role of natural gas for the energy transition in low- and middle-income countries.
UKEF targets net zero emissions by 2050
(Energy Live News, London, 23 September 2021) The UKEF has committed to making all of its £50 billion capacity carbon-neutral by 2050 on a net basis. Through its new climate strategy, the country’s export credit agency will increase its support for clean growth, renewables and climate adaptation exports. UKEF currently has a £50 billion capacity to support UK exports through loans and insurance. Through the new agreement, this capacity will be entirely carbon-neutral by 2050 on a net basis. It hopes its actions can inspire more financial institutions to take action ahead of COP26 in less than 50 days. Anne-Marie Trevelyan, International Trade Secretary, said: “UKEF’s net zero pledge shows the UK’s climate leadership and is an encouragement for other countries to follow suit. Meanwhile, a South West Business Council survey of companies finds many are not prepared to tackle emmissions and many have yet to be convinced about the economic benefits of going green and want financial support to achieve it.
New report reveals German government sabotages international energy transition
(Urgewald, Berlin, 15 September 2021) A new report by the environmental organisations urgewald and Deutsche Umwelt-Hilfe (DUH) shows that the German government is supporting climate-damaging oil and gas projects with guarantees worth billions of euros. In the report, the organisations examine climate-damaging oil and gas-related export credit guarantees as well as untied loan guarantees (UFK guarantees) for the period 2015 to May 2021. During this time, the German government approved 144 export guarantees in the oil and gas sector with a total volume of more than 11.75 billion euros via Euler Hermes AG. Of the 28 countries in which oil and gas guarantees were granted, 15 are considered “not free”, according to Freedom House. The report is based on data made available to the two organisations by the German government through a Freedom of Information Act request.
UKEF is ‘exagerating’ the number of businesses helped
(The Times, London, 20 September 2021) The UK’s UKEF has been accused of exaggerating how many businesses it has supported, of undermining the national drive towards net-zero carbon emissions and of doing too little to help smaller exporters. MPs on the Commons’ international trade committee said that UK Export Finance had directly helped far fewer companies than its “headline figure of 549 businesses supported” in the 2020-21 financial year, with only 167 directly applying for finance and insurance. Global Trade Review also notes that the government inquiry into the work of UKEF has raised concerns over the agency’s concentration of support in certain sectors, ambiguous figures in its annual accounts, and potential exposure to environmental and human rights issues.
U.S., Europe at OECD Seek to End Export Financing for Coal
(Wall Street Journal, Paris, 14 September 2021) The U.S., the European Union, South Korea and other wealthy nations are moving to forbid their export-financing agencies from supporting coal-fired power projects overseas, in an effort to end government support for a fuel that is one of the world’s biggest sources of greenhouse gases. The proposed ban, which will be made this week at the Organization for Economic Cooperation and Development, is part of the West’s campaign to push China, India and other big developing countries to take a tough position against coal ahead of the November climate summit in Glasgow, Scotland. China and India have resisted entreaties by the U.S. and Europe to commit to end subsidies for coal-fired electricity, raising fears that deadlock over the issue could result in the collapse of climate negotiations in Glasgow. The OECD, a Paris-based organization of 38 developing and developed economies, oversees an agreement governing export-credit agencies, which provide financing for overseas customers of the countries’ domestic companies. The U.S., the 27 nations of the EU, the U.K., Norway, Switzerland, Japan, Australia, South Korea, New Zealand and Turkey are signatories of the deal. In other news the US Treasury has instructed representatives at multilateral development banks to support clean energy projects over fossil fuels, putting the fate of several gas projects in the balance. Interestingly no news could be found on the OECD website today on the results of the OECD coal negotiations on September 15-16. The OECD web site divulges no results at all for searches re export credit and their ECA work page is burried very deep in their site map and shows no postings since September 8th. Indications are that there were differences over the definition of “unabated coal fired plants” to be banned, whether to include gas and mining or transport of coal. Further meetings are planned for October 12th and 20th. As world leaders met for a high level dialogue on energy at the UN in New York, 200 green groups urged them to embrace renewables and stop financing all fossil fuels.
EXIM finances massive LNG project that will cause climate chaos
(FOE USA, Washington, 27 September 2019) The U.S. Export-Import Bank’s (EXIM) Board of Directors voted late yesterday to provide $5 billion in financing for a liquid natural gas (LNG) project in Mozambique, making it the largest federal subsidy for a fossil fuel project in the bank’s history. This final vote by the board follows a preliminary vote last month and a 35-day Congressional review period. The board’s vote comes as U.S. Representative Rashida Tlaib (D-Mich.) and Senator Jeff Merkley (D-Ore.) led delegation letters opposing the project. Despite the opposition, EXIM charged forward with this massive fossil fuel project, which EXIM admits will directly emit at least 5.2 million tons of carbon dioxide per year. “EXIM’s irresponsible approval of $5 billion for LNG development in Mozambique, despite Congressional opposition, demonstrates how the bank puts fossil fuel profits above the health of local communities and the planet,” said Kate DeAngelis, Senior International Policy Analyst at Friends of the Earth. “Congress now has the power to end EXIM’s support for fossil fuels if it chooses to reauthorize the agency.” Although natural gas is often touted as a cleaner fuel than coal, when you take into account the leaks involved in extraction, transportation, processing and burning of LNG it is not better for the climate than coal. Yet, the head of the EXIM board, Kimberly Reed, voiced her strong support for the industry. A 2016 Oxford study found that for the world to have a 50 percent chance of staying within internationally agreed limits for global warming, no new fossil fuel plants could be built after 2017.
Iran’s ECA Covers $1b Exports in 5 Months
(Financial Tribune, Tehran, 1 September 2019) The Export Guarantee Fund of Iran covered non-oil exports worth $1 billion in the first five months of the current fiscal year (started in mid-March), head of EGFI said.The figure shows 60% growth in the export credit agency insurance cover compared to the similar period last year, according to EGFI website.EGFI expects to increase coverage to $2.5 billion by the end of this fiscal year [March 2020), Afrouz Bahrami told a seminar on promoting exports during sanctions. According to media reports, EGFI is able to cover export risk to the tune of $2.3 billion or 5% of the Iran’s $40 billion non-oil export market. She ascribed the significant growth in the performance of EGFI to increase in the number of applications for covering risk emanated from US sanctions, diversification of guarantee services, customizing services to make them compatible with expert requirements and rising promotional activity of the fund.
India, Russia identify new prospects for ECA led cooperation
(Elets Technomedia, Noida Uttar Pradesh, 4 September 2019) With bilateral trade between India and Russia showing a robust growth, growing by 17% to $ 11 billion in 2018 alone, Russian Export Centre (REC) is focusing on providing a wide range of financial and non-financial support in order to realize the full potential of the bilateral trade between the two countries by improving export conditions and leveling existing trade barriers. Russian Agency for Export Credit and Investment Insurance (EXIAR JSC) and ROSEXIMBANK JSC, are the shareholders in REC.
