Index for October 2021

Volume 20, Issue 10

  • (Oil Change International, Washington, 22 October 2021) Today the OECD Export Credit Group announced new restrictions on its support for overseas coal projects. These restrictions build on the Coal-Fired Electricity Generation Sector Understanding that was negotiated in 2015 and went into effect 1 January 2017. That agreement prevented OECD-member export credit agencies (ECAs) from supporting coal-fired power plants that were less efficient unless they were in developing countries. Unfortunately, there were loopholes that allowed for continued support even for coal plants that did not meet these restrictions. Today’s restrictions would end ECA support for coal plants that do not have carbon capture, utilisation and storage (CCUS) equipment in place. Still some export of equipment for retrofitting plants with CCUS or reducing emissions will be allowed if lifetime and capacity of coal plants is not extended. The restrictions do not address export finance for coal mines and related infrastructure, nor oil and gas financing even if the latest IEA report shows that investments in new fossil fuel production need to end this year to limit warming to 1.5°C.

  • (ECA Watch, 27 October 2021) We can’t solve the climate crisis if export credit agencies (ECAs) continue to bankroll fossil fuels. Tell the governments behind these agencies to immediately end all export credit and other public financial support for oil, gas and coal.
    Join our side event at COP26 November 4, 2021 in Glasglow
    At COP26 on November 4, 2021, 16.45-18.00 Glasgow time representatives from NGOs and Zurich-based universities will host a digital side event on aligning export finance with the Paris Agreement. Contrary to Article 2.1c of the Paris Agreement, many countries heavily support fossil fuel investments abroad, contributing to carbon lock-in. By highlighting the impacts caused by export finance in the Global South, this side event will provide concrete recommendations for decarbonizing export finance. The speakers on the panel are Axel Michaelowa (University of Zurich); Kate DeAngelis (Friends of the Earth US); Bjarne Steffen (ETH Zurich); Laila Darouich (Perspectives Climate Research); Ayumi Fukakusa (Friends of the Earth Japan); Richard Matey (Alliance for Empowering Rural Communities, Ghana) ; Julio Bichehe (Farmers Union Cabo Delgado Mozambique); and Mariane Søndergaard-Jensen (Danish ECA, EKF, Denmark).
    To attend the side event digitally, please register using the form. We’ll keep you updated on when and where the event will take place.
    Important: you will need to be registered at COP26 to be able to join the event.

  • (Lexology, London, 4 October 2021) The European Commission launched a consultation process on 30 September 2021, sending a proposal to Member States on a sixth draft amendment to the Temporary Framework on State aid measures to support member economies in the current COVID-19 outbreak. The Temporary Framework sets out various categories of aid [subsidies?] that can be implemented by Member States, one of which is more flexible rules on short-term export credit (which are not covered by the OECD Arrangement), permitting state aid via export credit insurance to riskier countries, allowing generous financial terms beyond fair market competition. The Commission proposes to extend until 30 June 2022 the temporary removal of all countries from the list of “marketable risk countries” under Annex 1 of the Communication on short-term export credit insurance. Marketable risk countries are those which may have risks due to exchange rate volatility, foreign exchange control regulations, lack of foreign exchange for repayment, etc.

  • (Offshore Enginer, New York, 22 October 2021)Italy's biggest banking group Intesa Sanpaolo could help fund Novatek's Arctic LNG 2 project even as some European governments show lukewarm support for the giant Russian gas project. Antonio Fallico, chairman of group unit Banca Intesa Russia, told Reuters the bank had been invited to look at the financing deal by SACE, the state-owned Italian export credit agency. Novatek said in September they had credit lines open for a third of the total financing from Russian banks, adding Chinese and Japanese banks could provide the rest. The pressure on institutional investors from climate lobby groups to stop funding fossil fuel companies has intensified markedly in recent years. The $21 billion project, which received final investment approval in 2019, is expected to reach full capacity of almost 20 million tonnes of LNG per year in 2026.

  • (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.

  • (Goa Spotlight, London, 21 October 2021) The UK is negotiating with Ukraine on the sale of the first ever consignment of weapons, in particular missiles, the Times newspaper writes with reference to a Ukrainian source. As part of the discussed agreements, London may supply Kiev with ground-to-ground missiles and aircraft missiles. The UK Ministry of Defense, according to the newspaper, is also discussing the sale of Brimstone missiles to Kiev, developed by the MDBA consortium, for installation on the ships of the Ukrainian Navy. In addition, the parties are considering the possibility of supplying air-launched Brimstone missiles, their cost is about $ 138,000. According to some reports, according to the Times, negotiations on the supply of weapons to Ukraine may also be linked to the construction of the Nord Stream 2 pipeline. The talks are prompted by the strengthening of relations between Kiev and London after the UK left the European Union. In October last year, Ukrainian leader Volodymyr Zelenskyy signed a contract with the UK Export Credit Agency, which deals with the supply of modern military equipment and the latest high-precision weapons to Kiev, types of military products in Ukraine, as well as the construction of bases for the Ukrainian Navy.

  • (Financial Times Trade Secrets, Budapest, 26 October 2021) The industry has helped backstop sectors such as airlines hit hard by Covid, saving companies and jobs. An interview with the head of the Berne Union, an association of export credit agencies, to find out how it is helping exporters arm themselves against the downsides of the pandemic through export credit and insurance. The Berne Union operates all over the world allowing countries such as the US and China or Iran and Israel to discuss trade issues freely at Berne Union conferences, with political considerations mostly taking a back seat. It was that environment of co-operation that helped ensure exporters did not go out of business permanently when coronavirus effectively shut down cross-border movement during the spring of 2020. Over the course of the pandemic, members of the Berne Union provided $2.5tn in cover, its president Michal Ron told Trade Secrets. All in all, the volume of business supported by members rose 2.4 per cent between 2019 and 2020. “We have ECAs that are government agencies directly under a ministry,” she said. “Others are joint stock companies with a government-based shareholder. Some simply use direct government funding — it depends.

  • (Peterborough Examiner, 18 October 2021) The federal government has no plans to immediately stop Crown corporations from financing fossil fuel companies, but it’s not ruling out pushing them to reduce those supports more quickly, says Canada’s environment minister. The issue of public financing for oil and gas companies is expected to be on the agenda at the next major world summit on climate change this month, where countries that signed the 2016 Paris Agreement — including Canada — are under pressure to increase efforts to reduce their annual greenhouse gas emissions. A major report from leading scientists this summer prompted the United Nations’ secretary general to herald the “death knell” for fossil fuels that have driven emissions for decades. In an interview Friday, federal Environment Minister Jonathan Wilkinson told the Star that Crown institutions like Export Development Canada (EDC) are already committed to “net-zero” emissions — when nature or technology can remove remaining greenhouse gas pollution from the air — by 2050. Big money is in play here. EDC, the government’s export credit agency, says it provided financing and insurance that helped facilitate $62 billion in business for Canadian oil and gas companies from 2015 to 2020. And the board that invests the Canada Pension Plan’s $500-billion pool of money says it had about $17.6 billion invested with fossil fuel producers around the world as of March 2021.

  • (Global Trade Review, London, 6 October 2021) The Australian government has created a A$2bn (US$1.5bn) loan facility to spur investment in the country’s critical minerals sector, as it attempts to position Australia at the source of supply chains for technologies such as battery storage and electric vehicles. The facility will be provided through the National Interest Account (NIA) of Export Finance Australia (EFA), the country’s export credit agency. The NIA handles transactions that the government directs EFA to support. Minerals such as lithium, cobalt, titanium and rare earth elements are categorised as critical minerals because they are relatively scarce or geographically concentrated, difficult to substitute and are used in emerging technologies including large batteries. China is currently the biggest exporter of many of the minerals, with Australia another top supplier.

  • (PUNCH Nigeria, Lagos, 24 October 2021) The £1.5bn financing set aside for Nigeria by the UK Export Finance, the United Kingdom government’s export credit agency, has remained largely untouched, the UK Government Department for International Trade, Nigeria has said at the 2021 Energy Sustainability Conference organised by the Energy Institute Nigeria in Lagos. “UKEF is focussed on 30 countries in Africa with a combined market risk appetite of £58bn." According to Chimwemwe Chalemera, Country Director, UK Government Department for International Trade, Nigeria, the UK’s renewable energy capabilities are a right match with the energy needs of Africa and Nigeria in achieving net zero ambitions. Meanwhile over 50 Nigerian civil society groups have written to President Buhari calling for oil in the massive OPL 245 field to be kept in the ground. This is the field that Shell and Eni acquired after allegedly paying $1.1 billion in bribes. The companies' subsidiaries are currently being prosecuted in Nigeria and there is still an investigation in The Netherlands.

  • (Insurance News Net, Dubai, 5 October 2021) Etihad Credit Insurance (ECI), the UAE Federal export credit company and the French Export Credit Agency Bpifrance Assurance Export have signed a reinsurance agreement to increase joint Emirati and French projects globally. The agreement will further strengthen the robust trade and economic cooperation between the UAE and France and boost exports in both countries by providing export insurance solutions for Emirati and French companies. The UAE is France’s second-largest trade partner in the region. As part of boosting investment and trade ties, ECI earlier signed agreements with its counterparts in  the UK and Italy. The agreement with France has been deemed another milestone in ECI's mission to deepen the UAE's economic ties and non-oil trade.Saudi Arabia and Sweden have also discussed enhancing economic cooperation including via their ECAs.

  • (Natural Gas World, Vancouver, 19 October 2021) The Taliban’s ascent is driving renewed discussion about the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline. Taliban spokesman Suhail Shaheen said on August 18 that TAPI is a “long-term priority project” that the Taliban fully supports. Since the fall of the Soviet Union, energy companies have pondered routes to send natural gas from gas-abundant yet land-locked Turkmenistan to energy-poor Pakistan and onward to India. The Berdimuhamedov government of Turkmenistan and the Asian Development Bank (ADB) have made this pipeline a priority for years, but it has long been on life support, with the project’s press releases failing to obscure its grim deficits. the project is strapped for cash. The ADB has indicated it will contribute $1 billion in loans. The Turkmen government, grappling with a massive economic crisis, has risibly pledged $1.675 billion. The remainder is envisioned to come from export credit agencies and commercial lenders, all lending individually to the four governments and relying on sovereign guarantees from each country. What is an Afghan sovereign guarantee worth?

  • (Friends of the Earth Japan, Tokyo, 29 October 2021) The Japan Bank for International Cooperation (JBIC), a public financial institution fully owned by the Government of Japan, announced in a press release today that it has decided to provide up to US $850 million for the LNG Canada Project. The LNG Canada project plans to liquefy shale gas extracted from Montney, British Columbia and transported through its 670 km Coastal Gaslink pipeline to Kitimat for export to Asian markets.The decision by JBIC ahead of the 26th session of the Conference of the Parties (COP 26) to the United Nations Framework Convention on Climate Change (UNFCCC) starting from the end of this week in Glasgow, England, goes against the call by the UK government to stop public financing for fossil fuels, and shows that Japan's approach to climate change is still far from that of the rest of the world. It is inevitable that Japan will once again become the target of criticism from the international community. Serious violations of indigenous peoples rights have been pointed out in an associated project of the LNG Canada project. We strongly condemn JBIC's decision to provide financing, disregarding the impact on climate change and the human rights of Indigenous Peoples, and call on involved operators and financial institutions to immediately withdraw from the project.