New report reveals: German government sabotages international energy transition through guarantees for oil and gas industry
Berlin 15.09.2021
A new report by the environmental organisations urgewald and Deutsche Umwelt-Hilfe (DUH) shows that the German government is supporting climate-damaging oil and gas projects with guarantees worth billions of euros.
- German government provides support for oil and gas projects through foreign trade promotion
- 144 export guarantees in the oil and gas sector from 2015 to May 2021 worth over 11.75 billion euros
- Majority of projects supported are located in countries where significant human rights violations take place
In the report, the organisations examine climate-damaging oil and gas-related export credit guarantees as well as untied loan guarantees (UFK guarantees) for the period 2015 to May 2021. During this time, the German government approved 144 export guarantees in the oil and gas sector with a total volume of more than 11.75 billion euros via Euler Hermes AG. Of the 28 countries in which oil and gas guarantees were granted, 15 are considered "not free", according to Freedom House. The report is based on data made available to the two organisations by the German government through a Freedom of Information Act request.
Export guarantees, also known as "Hermes guarantees" because they are processed by Euler Hermes AG, are granted to companies and banks based in Germany to secure their export transactions, often aimed at developing and emerging countries, against payment default. Untied loan guarantees (UFK guarantees) are granted to banks when they are involved in transactions that serve the supply of raw materials to Germany. During the period under review, no UFK guarantees were granted - not because the German government opposed them, but because applications were withdrawn or not submitted after preliminary enquiries.
Gas expert Andy Gheorghiu, author of the report, says: "It is appalling how much the German government is sabotaging the international energy transition with these guarantees by helping to lock-in the continued use of oil and gas internationally. In particular, it is outrageous that the German government continues to classify natural gas as a support-worthy resource in its raw materials strategy, even though its climate-damaging effect has been scientifically proven."
Sascha Müller-Kraenner, DUH's national director: "By promoting oil and gas projects abroad, the German government is further fuelling the climate crisis. This does not serve German interests, but puts the future of young people at risk. In order to comply with the Paris climate limits, natural gas and oil production must be stopped as soon as possible. The British government is showing the way: it will no longer give money or support to fossil fuels abroad - an example that the new German government must follow."
The report by DUH and urgewald lays out a number of problematic projects that were supported with guarantees in the period under review:
- - the Amur petrochemical plant/ Eastern Russia,
- - the Nord Stream 1 and 2 pipelines,
- - the Yamal LNG complex in Russia and
- - the Gas Natural Acu liquefied natural gas terminal and power plant in Brazil.
The report also highlights the Arctic LNG 2 project, another liquefied natural gas project in the Arctic, for which a guarantee application is pending. The procedure is still ongoing. Guarantees for this project have also been applied for in Italy and France. Although the French company Total is one of the main sponsors of the project, President Macron indicated at the World Congress of the IUCN (International Union for Conservation of Nature) in Marseille at the beginning of September2021 that his government will not support the project for climate and biodiversity reasons.
Regine Richter, energy expert at urgewald, says: "The German government shouldn’t support this project either if it wants to retain a shred of climate credibility. Euler Hermes itself lists the project as having potentially significant environmental, social or human rights impacts. The Arctic LNG 2 production licences for the gas run until 2100, well beyond the time when the world must be climate neutral."
DUH and urgewald make five key demands on the German government in the report:
- The German government's raw materials strategy and the criteria for UFK guarantees must be changed so that the supply of fossil fuels (including natural gas) is no longer eligible for support.
- The German government must define clear exclusion criteria for Hermes guarantees for all fossil fuels and the associated value chains.
- Human rights violations and environmental damage - including destruction and pollution of water resources, loss of biodiversity or negative climate impacts - must be examined intensively and comprehensively in the project appraisal. Projects with a negative rating in any of these categories may not be supported.
- Projects affecting the rights of indigenous peoples must be excluded if the latter have not given their free, prior and informed consent.
- Transparency about guarantees and the projects they support must be increased.