Index for November 2014

Volume , Issue

  • Activists demand end of massive OECD support for fossil fuels

    Press release

    Activists demand end of massive OECD support for fossil fuels

    This week in Paris, a secretive body within the OECD will discuss the potential revision of the “gentlemen’s agreement” (1) under which they provide billions of dollars of public financing into the fossil fuel sector through their member export credit agencies.

    This morning, prior to a meeting with the OECD Export Credit Group, activists from the Export Credit Agency Watch network (ECA-Watch), including Les Amis de la Terre-FoE France, will protest outside the OECD, calling this public institution to enter the 21st century and end its support for fossil fuels.

    “We all know that fossil fuels cause all kinds of mayhem, including damage to environment and to human health, violation of human rights and harm to the global climate.And yet rich countries'governments play a crucial role in supporting  fossil fuel projects through their Export Credit Agencies,. With the international climate summit in Paris in 2015,  the OECD’s moral duty to stop worsening the world's fossil fuel addiction is even higher: it has to end fossil fuel support if it want to bring something to the fight against climate change””, explains Doug Norlen, Friends of the Earth US, member of the ECA–Watch network (2).

    Export Credit Agencies (ECAs) provide governmental-backed guarantees, insurance and loans to private corporations from their home country in order to promote exports and projects abroad. ECA support just for coal, the worst climate killer of the fossil fuels, has been enormous: the OECD ECAs have provided at least 32 billion US$ between 2007 and 2013 for coal plants and mines according to data compiled by the Natural Resources Defense Council (NRDC). (The French government alone, who will host the COP next year, put in 1,2 billion euros to support Alstom exports for just two power stations in South Africa during that time).

    “This subsidy stands in stark contradiction to the findings of leading climate scientists. The United Nation’s Intergovernmental Panel on Climate Change made clear that if global warming is to be kept under dangerous levels, the majority of proven fossil fuel reserves will have to be left in the ground” says Lucie Pinson from Friends of the Earth France, as well an ECA-Watch member. The activists want to take OECD’s Secretary General Angel Gurría at his word, who called for every government to consider curbing domestic and overseas support for coal plants.

    Today’s reason for the protest is a consultation in the Export Credit Group of the OECD. In this body discussions to consider restrictions on ECA support for coal plants commenced earlier this year with the US, UK and Netherlands proposing to implement an emissions performance standard ruling out future support for coal plants. “However, even this modest move, which focuses only on coal power plants and omits coal mining and infrastructure, is opposed by some retrograde OECD members”, complains Linde Zuidema, ECA-Watch coordinator. “Some OECD governments even dare to propose extended terms (e.g., longer repayment terms) for some kinds of coal plants, which would expand coal use even further. Their domestic coal industry, Alstom, Siemens, or Hitachi, pressures them to put corporate profits above climate, environment and human rights, which is outrageous”, says Zuidema.



    (1) The Arrangement is a "Gentlemen's Agreement" amongst its Participants who represent most OECD Member Governments. The Arrangement sets forth the most generous export credit terms and conditions that may be supported by its Participants.

Volume 13, Issue 11

  • (ECA Watch, Brussels, 18 November 2014) In the week of Nov. 18-21 a secretive body within the OECD discussed the potential revision of the “gentlemen’s agreement” under which they provide billions of dollars of public financing into the fossil fuel sector through their member export credit agencies. On November 18th, prior to a meeting with the OECD Export Credit Group, activists from the Export Credit Agency Watch network (ECA-Watch) protested outside the OECD, calling on this public institution to enter the 21st century and end its support for fossil fuels. A November 2014 report "The Fossil Fuel Bailout", by the Overseas Development Institute and Oil Change International estimates that G20 countries are subsidising oil, gas and coal explorers to the tune of $US88 billion

  • (ECA Watch, Brussels, 26 November 2014) A December 3 UN Forum on Business and Human Rights in Geneva will include an event organized by ECA Watch, The Danish Export Credit Agency, Justiça nos Trilhos and GLOBAL CSR on Export Credit Agencies and the UN Guiding Principles on Business and Human Rights. An additional case, where an ECA is involved, the Hidrosogamoso dam in Columbia, will be discussed at another session which is co-organized by CounterCurrent. ECA Watch's new report on Export Credit and Human Rights will be released at the UN Forum, with case studies from India, Brazil, Colombia and Belarus.

  • (BankTrack, Nijmegen, 29 October 2014) Ninety-two leading banks last year provided at least EUR 66 billion in financing to the coal industry, according to new coal financing data released today in BankTrack's ‘Banking on coal 2014' report. [1] The global campaigning network believes this represents a highly regrettable ‘record year' for financial support extended to the top 65 coal companies in both the coal mining and power sectors. In the same vein, a November 2014 report from Oil Change International (p.14) notes that "at a June 2014 ministerial meeting in Brussels, the G7 countries (a subset of the G20) reaffirmed their commitment to national fossil fuel subsidy elimination, as well as continued discussions on the need to reduce the climate impacts of export credit financing (European Commission, 2014)". But governments across the G20 countries are estimated to be spending US$88 billion every year subsidising exploration for fossil fuels and a significant percentage of these subsidies came from ECAs.

  • (Reuters, Paris 27 November 2014) France will eliminate export credits for energy projects in developing countries which involve coal, the most polluting fossil fuel, President Francois Hollande said on Thursday. The European Union is phasing out subsidies for domestic coal plants by 2018 in line with its efforts to take a global lead in the fight against climate change. But an EU policy paper seen by Reuters in June said European makers of coal-fired power plants such as France's Alstom should get financial help to export the equipment, flying in the face of environmental opposition to any form of subsidy for coal. "Eventually, subsidies to all fossil fuels should be phased out," Hollande said at France's annual environmental conference. "We are eliminating all export credits in the support that we give to developing countries whenever coal is used." The paper prepared by officials from the European Commission trade department before the new administration was sworn in said export credits, or preferential loans to help cover exports costs, should be continued for the most modern coal plant technology.

  • (Freight News, Piraeus Greece, 24 October 2014) The United States has challenged the Japanese government over moves to ramp up exports of coal-fired power technology and to offer cheap loans to lure buyers, according to a U.S. source with direct knowledge of the matter... Japan’s shipments of the equipment soared to nearly $8 billion last year as it looks to boost infrastructure exports, defying U.S. calls for developed nations to stop investment in foreign coal projects to curb greenhouse gas emissions... While the issue is unlikely to blow up into a major dispute, it could taint the two allies’ typically close relationship on energy and comes ahead of a November gathering of the Organization for Economic Cooperation and Development where members are expected to discuss coal-fired power funding.

  • (The White House, Washington, 12 November 2014) President Obama and President Xi recognize the importance of economic relations at the core of the U.S.-China bilateral relationship. The two Presidents commit to deepen bilateral economic ties. To this end, the United States and China commit to pursue policies that promote more open and market-driven bilateral and international trade and investment. This includes pursuing a high-standard and comprehensive bilateral investment treaty that embodies the principles of non-discrimination, fairness, openness, and transparency. In 2012, the US and China launched multilateral negotiations around new international export credit guidelines in the 18 nation International Working Group on Export Credits (IWG), outside of the OECD ECA working group. Through 6 meetings the US believes the IWG has made significant progress and is now at a critical juncture as it works to develop guidelines that, taking into account varying national interests and situations, are consistent with international best practices.

  • (RE:Common & ECA Watch Europe, Brussels/Rome, 27 November 2014) NGOs have written to Italy's Minister of Economic Development and SACE to express their deep concern about SACE's intention to issue a financial guarantee of up to 500 million Euros in favour of the controversial Enel-sponsored Mochovce 3 and 4 nuclear power plant project in Slovakia. Last June the German government decided to stop future support through Euler Hermes guarantees for nuclear power plants, in line with the decision in 2011, soon after Japan's Fukushima nuclear disaster, to phase out nuclear power production in Germany by 2021.

  • (Cistran Finance, Chicago, 11 June 2014) A list of 23 banks and ECAs that will be financing the construction of SOCAR’s STAR oil refinery in the Aliaga port in Turkey was announced in an official ceremony last week. The list includes the following ECAs: Export Development Canada, JBIC, NEXI, and SACE. Two coal fired power plants are planned in conjunction with the refinery. The Bankwatch Network notes that the SOCAR Refinery project and its ‘secret’ coal power plant suggests a polluted future for Turkey and the magnitude of the problems that the mixture of business interests, coal and neglect of local health concerns may cause.

  • (AnandTech, Seoul, 6 November 2014) Zalman, a pioneer of low-noise cooling solutions, filed for bankruptcy in Seoul on 3 November 2014. Zalman was acquired in 2011 by robotics manufacturer Moneual, which received about 620 million dollars in loans from several Korean banks and another 275 million dollars as export credit from the Korea Trade Insurance Corp. Moneual failed to repay their (massive) export bonds that matured on October 20, 2014, and ultimately filed for bankruptcy, despite repeatedly reporting major profits, with their 2013 annual report being nearly 1.2 billion dollars in sales and over 100 million dollars in profit. They apparently forged Zalman's export and accounting documents, greatly overstating their export and income reports, in order to become eligible for huge bank loans.

  • (The Telegraph, London, 25 October 2014) As more British companies begin to look overseas to tap new markets, the pressure is on George Osborne, the Chancellor, who has set a target to double the value of exports to £1 trillion by 2020, to provide greater financial support to businesses selling abroad... Traditionally, British companies were able to draw upon the financial clout of the City and the nation’s banks to help underwrite overseas projects and exports with letters of credit. But since the financial crisis most lenders have retrenched and become increasingly risk averse. That has breathed new life back into Britain’s recently re-named trade credit guarantee agency, UK Export Finance.

  • (Reuters, London, 28 October 2014) - Britain's export credit agency will guarantee a sukuk bond for the first time next year, the finance ministry said on Tuesday, as it seeks to boost London's position as a centre for Islamic finance... UK Export Finance (UKEF) expects to guarantee an Islamic bond next year issued by a customer of European plane maker Airbus, the finance ministry said... Issuers of Islamic bonds say they operate in compliance with sharia, or Islamic law. A ban on charging interest and investing in prohibited industries such as alcohol, pornography and gambling, are among features that distinguish it from conventional finance.

  • (Reuters, Washington, 7 November 2014) Republican critics of the U.S. Export-Import Bank moved on Friday to force the export lender to reveal full details of board discussions about potential deals, restarting a battle over the bank's long-term future. The move is the first salvo from Ex-Im opponents since Congress adjourned for an election recess in September. Just before the break, lawmakers approved a nine-month extension for the export credit agency, a compromise that pleased neither supporters wanting certainty nor opponents wanting to shut the bank down.

  • (Armenian News, Yerevan, 19 November 2014) Armenia has approved a proposal for the extension of an Armenian-Russian intergovernmental agreement on cooperation extending the operation of the 2nd power unit of the Armenian nuclear-power plant (NPP). Armenia’s Minister of Energy and Natural Resources Yervan Zakharyan noted that, under the agreement, Russia is to extend a $270m export credit to Armenia.

  • (SpaceNews, Paris, 12 November 2014) The French government will reform its Coface export-credit agency to enable it to offer financial backing to satellite projects at the same rates as its American counterpart... Coface used to dominate export credits for satellite projects. But in the past five years the U.S. Export-Import Bank, aided by the arrival of a commercially competitive launch services provider, Space Exploration Technologies Corp., has surpassed Coface in total financing commitments.