Index for November 2015

Volume , Issue

  • OECD deal to curb coal financing has more holes than a sieve

    Posted Nov. 18, 2015

    PARIS, FRANCE – After nearly two years of discussions, the Organisation of Economic Cooperation and Development member countries have finally reached an agreement on reducing their support to some coal plants through their export credit agencies. The agreement comes a day after the G20 has reiterated its willingness to reduce inefficient fossil fuel subsidies and only 12 days before the start of COP21, the climate change conference. The agreement, which only covers some OECD-member export credit agency financing for coal power plants and leaves out financing for mining, transport and related coal infrastructure, won’t do what is needed to solve the climate crisis.

    "Keep in mind that the OECD export credit agencies account for nearly half of publically supported coal internationally,” said Lucie Pinson, Private Finance Campaign at Friends of the Earth-France. “By ending its support, member countries of the OECD would have finally cut the financial base that keeps alive an industry in decline, and recognized their responsibility for climate change. But the elephant has given birth to a mouse, since the OECD has decided that public money could still be used to help the construction of many types of new coal plants, and thus fuel the climate crisis."

    According to the International Energy Agency, limiting the rise in global temperature below 2 degrees Celsius requires the end of new coal power plants as well as the closing of two thirds of the existing stock by 2035.  While the agreement puts some restrictions on financing for less efficient power plants, it still allows financing of ultrasupercritical coal power plants, particularly because of resistance from conservative countries, such as Korea and Australia.

    "With so many loopholes, this agreement has more holes than a sieve," said Friends of the Earth U.S. International Policy Analyst Kate DeAngelis. "In a world where any new coal plant reinforces the climate crisis, the OECD is merely another forum for developed countries to close their eyes to the climate emergency and their duty to adopt solutions to the crisis for which they are mainly responsible." 

    One of the main limits is that the deal, which amends the Arrangement on Officially Supported Export Credits,  does not cover a massive amount of non-Arrangement coal financing from these same agencies.

    "We expect countries, especially Japan, to apply this agreement  to every single coal transaction," said Rwhine Richter of Urgewald. "We will monitor very closely  the implementation of the deal and will make public any coal transaction that will be supported by OECD members.”

    Finally, the NGOs regret that the agreement, which will only entre into force in 2017, restricts financing for just some coal plants and fails to address  much larger volumes of export credit agency support to all other other fossil fuels. 

    Expert contact: Doug Norlen, (202) 465-1650, dnorlen@foe.org
    Communications contact: Kate Colwell, (202) 222-0744, kcolwell@foe.org
     

Volume 14, Issue 11

  • OECD deal to curb coal financing has more holes than a sieve

    (Friends of the Earth, Paris, 18 November 2015) After nearly two years of discussions, the Organisation of Economic Cooperation and Development member countries have finally reached an agreement on reducing their support to some coal plants through their export credit agencies. The agreement comes a day after the G20 had reiterated its willingness to reduce inefficient fossil fuel subsidies and only 12 days before the start of COP21, the climate change conference. The agreement, which only covers some OECD-member export credit agency financing for coal power plants and leaves out financing for mining, transport and related coal infrastructure, won’t do what is needed to solve the climate crisis. A recent research report notes that G20 members provide $452bn a year in fossil fuel production subsidies – despite pledges to remove them and take action to limit climate change.

  • US bill with Ex-Im extension attached extended to 4 December 2015

    (CCJ, Washington, 23 November 2015) President Barack Obama signed into law Friday, Nov. 20, a bill to extend highway funding, which includes Ex-Im renewal, for two weeks. A dozen Senators and 28 Representatives have been delegated to a bicameral conference committee tasked with producing a multi-year bill both chambers can agree to. The US House of Representatives Nov. 5th voted 363-64 to approve a multiyear transportation funding bill that would also renew the Export-Import Bank, setting up negotiations with the Senate, which had already passed its own highway funding bill. The two chambers must now resolve their differences. House Republicans had proposed 10 amendments with respect to the Ex-Im provisions of the Bill.

  • BPIFrance issues its first export credit

    (Global Trade Review, Paris 24 November 2015) France’s Banque Publique d’Investissement (Bpifrance) has issued its first export credit facility to bread equipment manufacturer Mecatherm, for the export of two bread production lines to Mozambique. Created in 2013, Bpifrance offers capital and innovation investment, guarantees and support for small businesses’ internationalisation. It is in the process of taking over Coface’s ECA offering to gather all public export support under one umbrella, with completion expected by mid-2016.

  • Envoys cry foul as US seeks to protect its farm export credits

    (Livemint, Delhi, 2 November 2015) The US has demanded ‘safe harbor’ protection for its controversial farm export credit programme from the disciplines underpinning the World Trade Organization’s agreement on subsidies and countervailing measures despite denying such a flexibility to India and other developing countries for public stockholding programmes for food security last year. In October, Washington’s trade envoy Ambassador Michael Punke sought the ‘safe harbor’ protection for export credits for its farm products from legal challenges arising from the disciplines in the WTO’s agreement on Subsidies and Countervailing Measures (SCM), which also apply to OECD export credit agencies. The EU has joined forces with Brazil and five other farm exporting countries to propose tighter WTO rules on export subsidies and similar measures, one month ahead of the global trade body’s ministerial conference in Nairobi, Kenya.

  • Petrobras secures US$1.84bn in export credit from ECAs

    (Global Trade Review, London, 18 November 2015) Brazilian national oil company Petrobras has concluded negotiations with international export credit agencies (ECAs) for a total of US$1.84bn. According to a company statement, this financing will contribute towards its fundraising efforts for 2016. The negotiations involve Italian ECA Sace, UK Export Finance (UKEF), Nippon Export and Investment Insurance (NEXI) from Japan and Austria’s Oesterreichische Kontrollbank (OeKB).

  • Sinosure executive dies days after corruption probe started

    (Caixin, Beijing, 27 November 2015) The chief auditor of state-owned Chinese ECA Sinosure was found dead in his office five days after he was put under investigation by the Communist Party's graft-fighting agency, a person with knowledge of the matter says. Agence France Press in Beijing also reports that Dai Chunning, a deputy general manager at Sinosure, “is suspected of serious discipline violations and currently under investigation”, the Commission for Discipline Inspection, a branch of the ruling Communist Party, said on its website.

  • Ukraine sets up export credit agency

    (Ukranian Journal, Kiev, 3 November 2011) The Ukrainian government is planning to create an export-credit agency to support national exports. The initiative is stipulated in draft law No. 9373 on the state financial support of exports, which was registered in Parliament on November 1. "The creation is foreseen of a state-run financial enterprise – a export-credit agency created in the form of a public joint-stock company by the state in the person of the Ukrainian cabinet - to secure Ukrainian exporters from commercial and non-commercial risks and to provide guarantees of the fulfillment of liabilities under foreign economic agreements by foreign buyers," reads the bill.
     

  • Tata Group Gets $500 Million of Canada Export Credit Financing

    (Bloomberg, Ottawa, 4 November 2015) Tata Group, the Indian owner of assets including Jaguar Land Rover and the Tetley Tea brand, will receive as much as $500 million a year in financing from Canada’s government-owned export development bank. EDC will underwrite loans to the Tata Sons unit to support orders from local suppliers, the Ottawa-based agency and Mumbai-based company said in a joint statement Wednesday. Tata has invested C$1.3 billion ($1 billion) in its Canadian operations over five years for products such as steel, chemicals and consulting services. The Tata financing follows a $500 million arrangement in April 2014 for Reliance Industries Ltd., another Indian company. Canada is seeking to broaden its exports beyond the U.S., which currently buys about three quarters of its northern neighbor’s foreign shipments.