(Global Trade Review, London, 14 October 2024) Ahead of crunch talks within the OECD Arrangement, climate groups are pressuring the US, Korea and Japan to agree to a comprehensive proposal that would halt billions of dollars in fossil fuel financing each year. In recent days, over 40 environmental and social activity groups have written to members of the OECD Arrangement on Officially Supported Export Credits, urging them to expand an existing ban on coal financing to also include oil and gas projects. Export credit agencies (ECAs) are among the world’s largest backers of fossil fuel transactions, often in developing regions such as Asia and Sub-Saharan Africa. Climate groups argue their support – in the form of guarantees, insurance and loans – can be vital in ensuring projects reach financial close. In the past year, the Export-Import Bank of the United States (US Exim) has seen two advisors on its climate board quit over a US$500mn loan guarantee backing oil and gas field expansion in Bahrain, while Japan’s agency has come under fire for financing a new gas field in Western Australia. Friends of the Earth, Oil Change International and BankTrack are among the signatories of the letter, which says it is “unthinkable that OECD agencies continue to pour billions into fossil fuel projects”.
Bank Track
ECAs continue to debate fate of Mozambique LNG project
(Global Trade Review, London, 17 April 2024) Financial backers are continuing to assess whether they should reaffirm their support for a multi-billion-dollar LNG project in Mozambique as operator Total looks to restart work. The project was suspended in 2021 after insurgents known as the Islamic State Mozambique attacked Palma, a town in the northern province of Cabo Delgado. Total declared force majeure and withdrew its staff from the nearby Afungi project site. But earlier this year, the French energy major announced its intention to restart the project, meaning its financial partners are also expected to confirm their commitment. A coalition of 124 civil society groups, including BankTrack and Friends of the Earth, have called on financial backers to reconsider their support of the project and urged them to withdraw their funding due to “the continuation of insurgent attacks and the failure of the Mozambican government and TotalEnergies to tackle the drivers of the conflict”. They also cite “ongoing human rights violations” and “irreversible climate and environmental impacts” as reasons to end support. The project is backed by a range of public and private financial institutions, including eight export credit agencies (ECAs) and 15 commercial banks. The ECAs involved are the Export-Import Bank of the United States (US Exim), UK Export Finance (UKEF), the Export-Import Bank of Thailand, Italy’s Sace, Japan’s Nippon Export and Investment Insurance (Nexi), the Export Credit Insurance Corporation of South Africa (ECIC), Atradius DSB of the Netherlands and the African Export-Import Bank (Afreximbank).
CSOs demand reduced OECD ECA support for oil and gas
(Price of Oil, Washington, November 2022) This document signed by 54 international civil society organizations outlines how the OECD Arrangement on Officially Supported Export Credits can align with the Paris Agreement warming target of 1.5°C by placing restrictions on export support for oil and gas projects and associated infrastructure. These restrictions build on the existing prohibition on coal-fired power, which came into effect 1 January 2022 and was preceded by the coal-fired power sector understanding (CFSU).
Italy’s SACE joins major banks to reject finance for Total’s EACOP
(Banktrack, Nijmegen, 20 May 2022) The coalition to #StopEACOP celebrates this week’s news that five banks including Deutsche Bank, Citi, JPMorgan Chase, Wells Fargo and Morgan Stanley have confirmed they will not join the project loan to finance the East African Crude Oil Pipeline (EACOP). They are joined by the insurer Beazley Group and the Italian export credit agency SACE. This takes the number of banks that want nothing to do with the EACOP project loan to 20 and the number of insurers to eight. The list of banks rejecting the project includes seven of Total’s ten largest lenders. However Eacop’s executives from the Ugandan government and oil companies remained confident that the financing package for the project will be tied up in two months.
Total’s East African crude oil pipeline ‘struggling’ to find financiers
(NationofChange, Costa Mesa CA, 8 February 2022) Campaigners have for years opposed the proposed pipeline and associated oil projects. They say that EACOP – which is set to be electrically heated to keep the oil at the right temperature – would cut through vital rivers and forest ecosystems. If the pipeline is built, over 100,000 people across Uganda and Tanzania would lose agricultural land, and thousands could lose their homes. TotalEnergies and partner China National Offshore Oil Corporation (CNOOC) signalled a public intention to proceed with the project last week. They pledged to invest more than US$10 billion in developing crude oil production in East Africa, in addition to the estimated $3.5-$5 billion cost of the pipeline. However, a coalition of environmental and human rights groups opposing the pipeline, Stop EACOP, says the announcement is thin on detail and the project is not yet assured. Last month, HSBC, Mizuho and the United Overseas Bank all confirmed they are not supporting the project. The statements bring the total number of banks that have distanced themselves from the project to 11, including ANZ, Barclays, BNP Paribas, Crédit Agricole, Credit Suisse, Royal Bank of Canada, Société Générale and UniCredit. After announcing the final investment decision, the shareholders of the East African Crude Oil Pipeline (Eacop) now turn to looking for money.
NGOs release the 2021 Global Coal Exit List: 1000 companies driving the world towards climate chaos
(Urgewald, Berlin, 6 October 2021) Three weeks before the start of the UN Climate Summit in Glasgow, Urgewald and 40 partner NGOs have released the 2021 update of the “Global Coal Exit List” (GCEL). The GCEL provides detailed data on 1,030 companies and around 1,800 subsidiaries operating along the thermal coal value chain. It is the world’s most comprehensive public database on the coal industry.
The Coal Policy Tool: A Tool for Quitting Coal
(Bank Track, Paris, 6 May 2020) Reclaim Finance has published the most accurate analysis tool ever released regarding policies adopted by French financial players in the coal sector. The aim is twofold: to facilitate the comparison between policies on the same public criteria and to allow clients, media and other stakeholders to assess the gap between existing practices and the objective of limiting global warming to 1.5°C. At the moment, only five French financial players have a robust coal phase-out policy. At least 40 French financial institutions, which belong to 25 financial groups, now have policies restricting their financial services to the thermal coal sector. These numbers are expected to increase following the commitment made in July 2019 by the Paris financial centre that all French financial players must adopt a coal phase-out policy by mid-2020.
Global Banks Funneled $2.7 Trillion into Fossil Fuels Since Paris Climate Agreement
(Bank Track, Nijemgen, 20 March 2020) The latest version of the most comprehensive report on global banks’ fossil fuel financing, Banking on Climate Change 2020, was released today, revealing that 35 global banks have not only been sustaining but expanding the fossil fuel sector with more than $2.7 trillion in the four years since the Paris Climate Agreement. The report finds that financial support for the fossil fuel industry has increased every year since the Paris Agreement was adopted in December 2015.
20% of Dominican Republic territory at risk from fossil fuel auction
(Bank Track, Nijmegen, 26 November 26, 2019) Ahead of the November 27 auctioning of exploration licenses for 14 onshore and offshore oil and gas blocks in the Dominican Republic, environmental groups warned financiers not to back companies which may end up being awarded licenses. Dominican NGO CNLCC, Italy’s Re:Common and BankTrack have raised concerns over the major climate risks and adverse environmental and social impacts which would result from the opening up of fossil fuel blocks in the country’s Cibao, Enriquillo, Azua, and San Pedro basins which together cover more than 20 percent of Dominican territory. A major corruption scandal has plagued the Dominican Republic involving the Brazilian construction company Odebrecht, which received the Punta Catalina coal-fired power plant contract due to an opaque, allegedly criminal tendering process. European banks were compelled in 2018 to freeze their project finance disbursements.
Civil society groups call for an accountability mechanism for the Equator Principles
(Bank Track, Nijmegen, 27 August 2019) 79 civil society organisations and partners have submitted a joint statement to the Equator Principles Association (EPA) and signatory banks expressing disappointment that the current review process of the Equator Principles does not go far enough to strengthen accountability and ensure access to remedy. With the EPA currently revising the fourth iteration of the Equator Principles, the “EP4” review should be a moment of ambition for advancing accountability in project finance. Other notable submissions to the Equator Principles review process have also been made by the Investor Alliance for Human Rights and First Peoples Worldwide. Since a number of ECAs subscribe to the Equator Principles too, and ECAs also use the underlying IFC Performance Standards as a benchmark, this joint statement is relevant to ECA practices as well.
