(Brisbane Times, Brisbane, 11 April 2022) The Intergovernmental Panel on Climate Change’s Sixth Assessment Report, with its direct language and whole chapter on finance, should be a wake-up call to those in the business community who are avoiding taking genuine action on climate change. United Nations Secretary General Antonio Guterres didn’t mince his words when he introduced the report to the world, bluntly stating that investing in “new fossil fuel infrastructure is moral and economic madness.” The report calls out commercial banks and export credit agencies for the role they are still playing in financing fossil fuel investments. He notes that "Some government and business leaders are saying one thing – but doing another. Simply put, they are lying."
https://www.brisbanetimes.com.au/environment/climate-change/simply-put-they-are-...
(National Observer, Vancouver, 6 April 2022) Canada’s recently published emissions reduction plan provides a roadmap for how Ottawa plans to hit its 2030 climate targets, but critics say until the financial sector is aligned with climate goals, the government's plans are “derelict.” Environmental Defence’s climate finance manager Julie Segal says Canada appears excited about the benefits of sustainable finance but doesn’t appreciate the risks from continued fossil fuel investments. First, there's the systemic risk from climate change and how the financial sector and financial regulators approach that, and then there's the piece about how the financial sector is contributing to climate change through investments,” she said. “And Canada is being derelict on those accounts.” The 271-page emissions reduction plan contains [only] 4 pages dedicated to “sustainable finance” that outline at a high level a few of the federal government’s initiatives. However, Segal says the brief attention to financial issues in the plan, when compared to the detail offered for other sectors, shows Ottawa isn’t grasping the importance of the file. “Part of the reason they're not getting it is because the Sustainable Finance Action Council — all of the work on sustainable finance — is very much led by industry,” she said. “The federal government hasn't thought about finance and climate properly. They just haven't really understood what's going on here,” said Adam Scott, director of Shift Action for Pension Wealth and Planet Health. Greenwashing won’t cut it because real emissions reductions are needed to protect the economy at large from ever-worsening natural disasters and the economic impacts of climate change. Page 5 of a recent Oil Change International report shows that Canada leads the world in its public finance support for fossil fuel investments.
https://www.nationalobserver.com/2022/04/06/news/government-risks-disaster-barel...
(VICE, Brooklyn, 6 April 2022) The South Korean government has shelved plans to pour $700 million into a massive $4.7 billion gas project in Australia’s Timor Sea far north offshore after Tiwi Island Indigenous leaders from the region took them to court, according to government meeting notes seen by VICE. The Export-Import Bank of Korea pulled the handbrake on part of a mammoth $US700 million investment into the controversial Barossa gas project in Australia’s Northern Territory last month. “Not only is the Barossa gas project more polluting than other existing gas fields, but it also faces business uncertainty with its incomplete carbon capture and storage scheme, and plummeting long-term liquified natural gas demand,” said Hye-Young, South Korean National Assembly representative. ABC Australia reports that South Korea's K-SURE and Japan's JBIC have approved their financing, so the project's financing hinges on KEXIM. Larrakia and Tiwi Islander traditional owners, along with an international coalition of anti-gas groups, are targeting plans for a $4.7 billion Barossa gas development, to be built and operated by Santos, in waters about 300 kilometres north of Darwin. Conversation Canada has noted that this Tiwi Islands offshore gas fight shows public banks are under real pressure over fossil fuel funding. They note that Public financial institutions are under renewed pressure to change lending practices after the world’s leading climate scientists strongly warned against any new fossil fuel infrastructure. In our region, public banks in China, Japan, and South Korea now face unprecedented scrutiny for their role in financing the climate crisis. While export credit agencies are not the only funders of oil, gas and coal infrastructure, and not the largest either, they have been instrumental in developing many of the world’s most carbon intensive sectors. How? By locking in fossil fuel energy systems, leveraging private finance by reducing risk premiums, and shaping international standards which influence private bank policies. In short, they have played a key role in enabling fossil fuel expansion. For decades, these state supported agencies have gone under the radar. No longer. Scrutiny is increasing of their work borrowing from national treasuries or public capital markets to finance export-oriented fossil fuel projects.
https://www.vice.com/en/article/akv94k/indigenous-australians-have-derailed-a-co...
(Oil Change, Washington, 28 April 2022) Public finance institutions shape our future energy systems. They are uniquely positioned to catalyze a just, transformative, and rapid transition to clean energy and a livable future — if we can hold them accountable to their public-interest mandates. But the decade-plus of data Oil Change International has collected for the newly launched Public Finance for Energy Database (energyfinance.org) shows most influential international public finance institutions are failing to take the very first step: stop funding fossil fuels. The headline finding of our database is that G20 countries’ trade, export credit and development finance institutions and the major multilateral development banks (MDBs) provided at least $63 billion each year to coal, oil, and gas projects between 2018 and 2020. That is 2.5 more than the support for clean energy by the same institutions over the same period. In addition to this critique, the report notes that there is momentum growing to end public finance for fossil fuels and shift this to support a just energy transition, with 39 countries and institutions committing to do this by the end of 2022 under the Glasgow Statement at COP26.
https://priceofoil.org/2022/04/28/launched-public-finance-for-energy-database/
(The Guardian, London, 31 March 2022) UK Export Finance used £5.24bn of taxpayer money to fund overseas energy and infrastructure ventures despite its own review raising concerns over labour abuses and environmental damage. Since 2019, UKEF has allocated £5.24bn of taxpayer money to projects with the potential to cause “significant adverse environmental and/or social impacts” in countries across the Middle East, Africa and Asia, according to calculations by the Guardian based on disclosures made by UKEF. Oil refineries, power stations, and a large-scale liquified natural gas (LGN) project are among the high-risk “Category A projects”, to receive funding recently. UKEF undertook environmental and human rights reviews of the projects ahead of granting the funding. Despite recommendations to mitigate labour abuses, six migrant workers employed on Middle Eastern projects backed by UKEF have revealed low pay, safety hazards, excessive working hours, and the denial of freedom of movement as persistent issues. Daniel Willis, policy and campaigns manager at Global Justice Now said that “Human rights considerations are an afterthought, and due diligence seems to be approached as if it is just a box to tick.” A review of an oil refinery upgrade programme in Kuwait, obtained by a freedom of information request, shows that UKEF knew of worker issues before it provided a $179m (£135m) support package in 2019. Employees and contractors were commonly working more than the maximum overtime hours allowed by legislation, and 87% of workers surveyed had not received an employment contract, according to the UKEF’s review. About 90% of workers at Kuwait National Petroleum Company (KNPC) had also been charged illicit recruitment fees to secure their jobs. Before awarding it $500m in 2019, a UKEF review flagged the Bahrain Petroleum Company (Bapco) oil refinery expansion project as having “forced and child labour and worker health and safety as potential project risks”.
https://www.theguardian.com/global-development/2022/mar/31/britain-hands-billion...
(Global Trade Review, London, 20 April 2022) Friends of the Earth says it will continue its fight against UKEF's decision to provide US$1.15bn of support to a natural gas project in Mozambique, after a split judgement from two UK High Court judges. In a judgement handed down last month, Justice Stuart-Smith dismissed Friends of the Earth’s claim, ruling that UKEF’s assessment of the climate change impacts of the project was lawful. But the second judge hearing the case, Justice Thornton, found that UKEF had failed to take climate impacts properly into consideration and ministers who approved the financing package did not have access to enough information to make a decision. The project under development by Total includes two offshore gas fields and a liquefaction plant with capacity of some 13 million tonnes per year. UKEF is among eight other export credit agencies and 19 commercial banks financing the project, in what Total says is the largest project finance deal ever struck in Africa. When fully operational it is expected to significantly lift Mozambique’s contribution to greenhouse gas emissions, however its proponents say that it may lead to an overall shrinking of emissions because some buyers will use the exported gas to switch from fuel sources such as coal and oil. During the course of the judicial review, arguments focused on a climate change impact report produced by UKEF which was provided to ministers who had input into the funding decision. The report relied heavily on an assessment by energy consultants Wood Mackenzie and Wood Mackenzie acknowledged that the report had severe limitations due to the difficulty of knowing where and how the exported gas would be used. An internal UKEF email described the report as “very light and [it] makes high level assumptions”. Total suspended construction of the Mozambique project and evacuated workers after insurgent attacks in early 2021, delaying the expected start of production to 2025. The company’s chief executive Patrick Pouyanne told Reuters in February that the company plans to restart construction sometime this year.
https://www.gtreview.com/news/europe/ukef-faces-further-legal-action-over-mozamb...
(Bloomberg, Washington, 13 April 2022) The U.S. Export-Import Bank approved a plan Thursday that could yield a flood of financing for U.S. energy ventures, including wind and solar projects, battery manufacturing and terminals to sell LNG overseas. The bank’s board voted 3-0 on a formal policy shift encouraged by the Biden administration that would extend support to domestic manufacturing and infrastructure projects that facilitate exports. The agency plans to prioritize financing for green projects, from renewable power ventures to clean energy manufacturing. The initiative would apply to non-energy ventures too, including the manufacture of semiconductors, biotech and biomedical gear. Environmentalists and natural gas advocates say the initiative could also bolster a host of LNG export terminals proposed from the U.S. Gulf Coast to Alaska, especially given the Biden administration’s efforts to supplant Russian energy in Europe with U.S. supplies. Shipments of U.S. natural gas have surged over the past few years. While advocacy groups for the U.S. LNG sector quickly welcomed the plan, saying it could help projects overcome funding challenges and support thousands of jobs, environmentalists expressed concern that new LNG financing could take money away from renewable energy. As the U.S. attempts to bring down the soaring price of energy, financing from a New Deal–era agency could be used to ramp up domestic gas production. It is planning those controversial investments with almost no opportunity for public review. Now, under pressure from LNG interests, Exim may double down on its investment in fracked gas through a domestic financing program President Biden has created to strengthen supply chains.
https://www.bloomberg.com/news/articles/2022-04-13/lng-projects-may-get-funding-...
(New York Times, Kampala, 8 April 2022) Vanessa Nakate, Ugandan climate justice activist, notes that this week, the panel of climate experts convened by the UN delivered a clear message: To stand a chance of curbing dangerous climate change, we can’t afford to build more fossil fuel infrastructure. We must also rapidly phase out the fossil fuels we’re using. In moments like this, the media rarely focuses on African countries like mine, Uganda. When it does, it covers the impacts — the devastation we are already experiencing and the catastrophes that loom. They are right to: Mozambique has been battered in recent years by cyclones intensified by climate change. Drought in Kenya linked to climate change has left millions hungry. In Uganda, we are now more frequently hit by extreme flash floods that destroy lives and livelihoods. Africa isn’t only a victim of the climate crisis, but also a place where infrastructure decisions made in the coming years will shape how it unfolds. TotalEnergies, a French energy company, this year announced a $10 billion investment decision, which involves a nearly 900-mile oil pipeline from Kabaale, Uganda, to a peninsula near Tanga, Tanzania. From there, the oil would be exported to the international market. Despite local opposition, TotalEnergies and a partner, the China National Offshore Oil Corporation, have pushed ahead. The project might have a difficult time securing additional financing, as many banks have already ruled out the project. The multinational insurance company Munich Re has also vowed not to insure it, at least in part because of the harm it would do to the climate. An estimated 14,000 households will lose land, according to Oxfam International, with thousands of people set to be economically or physically displaced. There are reports that compensation payments offered to some communities are completely insufficient. In other news, Ugandan NGOs have written to German and Italian ECAs asking them to not finance EACOP, noting that if constructed the pipeline will be the longest electrically heated crude oil pipeline in the world, will transport 216,000 barrels of crude oil per day at peak production, will displace over 86,000 people from 5,172 hectares of land in Uganda and Tanzania, affect nearly 2,000 sq.km of protected areas, a quarter of which are habitats for endangered species, threaten the livelihoods of hundreds of thousands of Lakes Albert and Victoria fishers in Uganda and the DRC and result in the production of over 34.3 million metric tonnes of carbon per year, roughly 7 times Ugana's annual emissions when the oil is burnt.
https://www.nytimes.com/2022/04/08/opinion/environment/east-africa-oil-pipeline....
(Global Trade Review, London, 11 April 2022) Momentum continues to build around environmental, social and governance efforts in trade and trade finance. Every week, we report on encouraging new developments, including a recent decision by the European Council that gives export credit agencies (ECAs) in the EU until the end of 2023 to set deadlines for ending support for fossil fuels; the formation of the Climate Working Group, a new initiative convened by the Berne Union bringing together ECAs and other insurers and financiers to accelerate climate action; as well as the much-anticipated launch of a pilot of a new ESG scoring tool for measuring country, supply chain and company activity against EU and UN sustainability goals. Other developments have been less heartening. The annual Banking on Climate Chaos report, a comprehensive global analysis on fossil fuel financing released as this publication goes to press, documents that in the six years since the adoption of the Paris Agreement, the world’s 60 largest private banks poured US$4.6 trillion [yes trillion] into fossil fuels. As much as US$742bn of support was provided in 2021 alone. The report, co-authored by NGOs including BankTrack, Sierra Club and Oil Change International, includes a timeline that lays out how banks that joined the Net-Zero Banking Alliance last year simultaneously financed “some of the most egregious oil and gas expansion companies”. In this publication, we take a closer look at these and other issues impacting on ESG and trade.
https://www.gtreview.com/magazine/esg-trade-issue-2022/from-the-editor-17/
(Reuters, Washington, 31 March 2022) The U.S. EXIM's board of directors on Thursday voted to formalize the bank's withdrawal from any further business in Russia and approved financing and to guarantee deals worth up to $381 million for Iraq, Sri Lanka and Albania. The board also voted to notify Congress of a proposed renewal of a $450 million credit guarantee to Citibank that backs a $500 million facility to allow 365 suppliers of aircraft maker Boeing to receive accelerated receivables payments related to export sales of Boeing aircraft. The formal closing of Russian business follows an announcement last week by EXIM and export credit agencies in Britain and Canada to withdraw all support from Russia and Belarus in response to Russia's invasion of Ukraine. EXIM previously had an administrative hold prohibiting Russian business since Moscow's annexation of Crimea in 2014. EXIM still has $410 million in prior credit exposure to Russia, primarily for aviation sector loan guarantees that were granted before Crimea's annexation. Meanwhile, it’s not clear how many of the 500 or so foreign-owed planes stuck in Russia are potentially eligible for the exception, or which owners will be able to apply. Most of the aircraft are on operating leases vs fixed term rental contracts.
https://www.reuters.com/business/finance/us-exim-bank-formalizes-russia-pullout-...
(Xinhua, Beijing, 17 April 2022) China Export and Credit Insurance Corporation (Sinosure) says it has stepped up support for the country's green industries by providing more export credit insurance. Since the start of 2021, the company has insured over 150 green projects, with the sum insured reaching around 7.7 billion U.S. dollars. Sinosure has also strengthened its financial support to green projects under the Belt and Road Initiative and helped domestic companies explore overseas green and low-carbon markets. Take the photovoltaic industry as an example. Sinosure has helped facilitate the export of photovoltaic products worth over 130 billion U.S. dollars from 286 companies since 2005. Looking to the future, Sinosure will continue to explore green finance innovation, promote the integration of green finance and green industries, increase support for green industries and green projects, and give better play to the role of export credit insurance, the company said.
https://www.bignewsnetwork.com/news/272488901/sinosure-scales-up-financial-suppo...
(Regeringen, Stockholm, 12 April 2022) Google translation. The Swedish Riksdag has proposed a budget amendment for 2022 that would authorize the government to issue guarantees of up to SEK 3 billion (US$305 million) for the purpose of insuring critical raw material imports for industry, to be administered by the Swedish Export Credit Agency (EKN). The new government guarantee is intended to support the green transition threatened by increased demand for critical raw materials and increases in raw material prices which have risen markedly since Russia's invasion of Ukraine. The raw material guarantee would fall under EKN's sustainability policy and hence EKN must take into account its guaranteeing of the environment, extraction of fossil fuels, human rights and working conditions, combating corruption and tax evasion and promoting sustainable lending to poor countries. As the credit guarantee is linked to the import of raw materials, unlike EKN's other range of export credit guarantees, a new regulation is required and a Proposal for a new regulation went out for consultation on 25 March.
https://www.regeringen.se/pressmeddelanden/2022/04/regeringen-foreslar-en-ravaru...
(AssumeTech, Iceland, 21 April 2022) Aeroflot is considering the purchase of 8 chartered Airbus SE aircraft after the European Union provided a mechanism for lenders to dispose of some seized aircraft in Russia after the invasion of Ukraine, TASS reported. The planes operate under so-called finance leases, which the European Union created a penalty waiver this month by allowing payments from agreements signed before February 26. Financial leases refer in to new Airbus and Boeing aircraft, with export credit agencies guaranteeing approximately 85% of the amount lent to an airline by a banking association. Most of the approximately 500 foreign-owned aircraft blocked in Russia operate under operating leases in which airlines lease planes for a specified period and can return them to the owner after the contract has expired. Russia passed a law banning foreign-owned planes from leaving without state permission after the Ukrainian invasion imposed penalties on lessors for canceling contracts and trying to return their planes.
https://asumetech.com/russian-airlines-is-negotiating-for-the-purchase-of-8-airb...
