What's New for October 2024
"What's New!" is a periodic update to keep you informed of the latest on the ECA Watch website. What's New! features a wide range of materials related to the reform of Export Credit Agencies (ECAs) including NGO publications and releases, news articles, commentaries and announcements about the policies and practices of ECAs and ECA-financed projects world-wide.
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- ECAs prepare to lock horns over fossil fuel financing
- Cutting Fossil Fuel Financing
- Oxfam calls for a green overhaul of the US Export-Import Bank
- Petrochemical Plant Wins EXIM Loan Despite Biden Climate Vow
- US Defense Dept Strategic Capital "arsenal"
- Longer payment schedules adding to liquidity woes of India's exporters
- UK approves use of export finance to source critical minerals
- US accelerates play for Africa’s minerals
- NGOs urge banks & China to refuse support for Ugandan oil projects
- Uganda finally signs deal to start building 1,700km railway, dumping China
- Hyundai gets $1.35B in export financing for Georgia EV facility
- European ECAs reach out to Indian companies, banks
- What did Cuba do with the €1.2 billion offered by Russia to build thermoelectric plants?
ECAs prepare to lock horns over fossil fuel financing
(Global Trade Review, London, 14 October 2024) Ahead of crunch talks within the OECD Arrangement, climate groups are pressuring the US, Korea and Japan to agree to a comprehensive proposal that would halt billions of dollars in fossil fuel financing each year. In recent days, over 40 environmental and social activity groups have written to members of the OECD Arrangement on Officially Supported Export Credits, urging them to expand an existing ban on coal financing to also include oil and gas projects. Export credit agencies (ECAs) are among the world’s largest backers of fossil fuel transactions, often in developing regions such as Asia and Sub-Saharan Africa. Climate groups argue their support – in the form of guarantees, insurance and loans – can be vital in ensuring projects reach financial close. In the past year, the Export-Import Bank of the United States (US Exim) has seen two advisors on its climate board quit over a US$500mn loan guarantee backing oil and gas field expansion in Bahrain, while Japan’s agency has come under fire for financing a new gas field in Western Australia. Friends of the Earth, Oil Change International and BankTrack are among the signatories of the letter, which says it is “unthinkable that OECD agencies continue to pour billions into fossil fuel projects”.
https://www.gtreview.com/news/global/ecas-prepare-to-lock-horns-over-fossil-fuel...Cutting Fossil Fuel Financing
(Friends of the Earth, Merrifield, 4 October 2024) Fossil fuel companies continue to be propped up by the government in the form of public financing like US EXIM. Often, these tax dollars are funding overseas fossil fuel projects wreaking havoc on our environment and local communities in places like Mozambique, India, Bahrain, Papua New Guinea — to name a few. At the 2021 United Nations Climate Change Conference (COP26) in Glasgow, more than 30 countries signed a commitment to end international public finance for fossil fuels and to prioritize funding for clean energy. If implemented fully, this resolution could shift $28 billion a year from fossil fuels into clean energy. In particular, the UK's ECA (UK Export Finance) cut its fossil fuel transactions from $11 billion to zero in just ten years. Previously, the agency had allocated more than 99% of its energy finance to fossil fuels. We have also seen great success pressuring other countries but the United States is the biggest violator of the COP26 commitment. In 2023 and, so far, in 2024, the US provided $3.5 billion for overseas fossil fuel projects. The US EXIM alone just approved financing for six mega-projects, including $500 million to develop 300 oil and gas wells in Bahrain. The US is the largest member of the coalition of signers and is the biggest problem. We will continue to pressure our export credit agencies to take this commitment seriously and accept responsibility and the largest historical climate polluter.
https://foe.org/impact-stories/cutting-fossil-fuel-financing/Oxfam calls for a green overhaul of the US Export-Import Bank
(Hacker News, Mountain View CA, 17 October 2024) As mounting climate concerns cause extreme weather events, & global efforts intensify to keep warming below 1.5°C, Oxfam calls on the Export-Import Bank of the United States (EXIM) to cease funding fossil fuel projects to instead champion just & clean energy initiatives. In a new research report published today, “Alignment of the United States Export-Import Bank with the US climate & development policy objectives,” Oxfam America & Perspectives Climate Research found that EXIM has financed hundreds of fossil fuel projects globally since its founding & continues to finance the most climate damaging sectors: at least 60% of its current $40+ billion portfolio directly supports fossil fuel-producing or dependent sectors like oil, gas, & aviation. Despite a requirement in its charter to devote 5% of its funding to renewable energy, energy efficiency, & storage, in 2021, only $72 million – or 1.25% of EXIM’s new authorizations – were considered environmentally beneficial, & only 0.2% were for renewable energies.
https://news.ycombinator.com/item?id=41965160Petrochemical Plant Wins EXIM Loan Despite Biden Climate Vow
(Bloomberg, New York, 11 October 2024) The US Export-Import Bank authorized a $690 million loan to help build a petrochemical plant in Malaysia, despite objections from climate activists who say the project flouts Biden-Harris administration promises to halt financing for fossil fuel projects abroad. The loan approved Thursday and disclosed Friday comes amid intensifying scrutiny of how independent US agencies are addressing climate change following decisions that run counter to President Joe Biden’s environmental agenda. In 2021 Biden issued an executive order vowing to curb public funding of climate-damaging ventures and the US signed a pledge with 33 other nations committing to halt such support.
https://www.bloomberg.com/news/articles/2024-10-11/petrochemical-plant-wins-us-l...US Defense Dept Strategic Capital "arsenal"
(Lexology, London, 30 October 2024) The US Defence Department's Office of Strategic Capital (OFC) is one of the newest entrants in the US Federal arsenal of finance tools for growth companies, providing loans between $10M and $150M to develop critical technologies vital to national security, with an initial program of up to $984M. Another US federal loan program is the Dept. of Energy's Loan Program Office (LPO) which has a "budget" of up to $300 billion to finance domestic renewable energy companies and projects. Together with USEXIM's "Make More in America Program” (MMIA), created to spur U.S. manufacturing and create more resilient supply chains, these three often overlooked federal finance mechanisms take on the credit risk which traditional banks and non-bank lenders (e.g. private equity) cannot [or will not] take on and which impose terms that crush return on investment. [Rare earths developer Australian Strategic Materials (ASM) has indicated that Australian firms can potentially access US Department of Defence funding under the newly set up Office of Strategic Capital.]
https://www.lexology.com/library/detail.aspx?g=22b4f7a2-5be9-402f-918c-f5a5863a2...Longer payment schedules adding to liquidity woes of India's exporters
(Financial Express, Delhi, 22 October 2024) Apart from higher costs and other difficulties, the disruption caused by the two war zones in the world has added to the liquidity woes of India’s exporters as they deal with longer payment schedules and the impact of the situation on export credit which is falling consistently since 2022. At the end of March 2022 quarter the outstanding export credit was at Rs 2.27 lakh crore and by the end of March this year it was down to Rs 2.17 lakh crore. While exports grew 15% between 2021-22 and 2023-24, export credit has fallen by 5%. On top of falling credit, the Red Sea disruptions have added to the liquidity pressures on exporters as payments are taking more time. All this has increased the time period of payment from less than 90 days to 120-150 days. Exporters now require more credit for a longer period and costs for them have increased. Despite the Export Credit Guarantee Corporation (ECGC) increasing the coverage of default in payment against exports to 90%, many of the banks have not reduced the collateral requirements which is also reducing the credit off-take by the sector.
https://www.financialexpress.com/business/industry-longer-payment-schedules-addi...UK approves use of export finance to source critical minerals
(Innovation News, London, 31 October 2024) UK Export Finance (UKEF), the government’s export credit agency, will offer financial support for overseas projects to source critical minerals. Securing contracts that increase the UK’s ability to source critical minerals will help the UK build economic resilience and lower the risk of supply-chain disruption in major industries like automotive, defence, and aerospace. Critical minerals are raw materials like lithium, graphite, and cobalt, which are essential to the UK’s largest export sectors. They are used in emerging and sustainable technologies like electric vehicles, solar panels and wind turbines.
https://www.innovationnewsnetwork.com/uk-approves-use-of-export-finance-to-sourc...US accelerates play for Africa’s minerals
(Africa Report, Paris, 1 October 2024) A new financing network and closer cooperation with Angola, Zambia and Tanzania all aim to challenge China’s grip on the continent’s resources. The United States and its allies consolidated their cooperation along a range of fronts during the UN General Assembly in the pitched battle for access to Africa’s critical minerals. [The Critical Minerals Africa (CMA) Summit – Africa’s leading investment platform for the critical minerals sector – will return for its second edition on November 6 - 7 in Cape Town. CMA 2024 brings together African and global policymakers, project leaders and key stakeholders along the critical minerals value chain to unlock and promote investment opportunities across Africa’s mining space.]
https://www.theafricareport.com/363094/us-accelerates-play-for-africas-minerals-...NGOs urge banks & China to refuse support for Ugandan oil projects
(Mongabay, Menlo Park, 17 October 2024) A group of 28 NGOs have written to 34 banks, insurance companies and the Chinese government, urging them to deny financing and other support for oil and gas projects in Uganda. The letters, written by U.S.-based Climate Rights International (CRI) and 27 Africa-based NGOs, follow a report detailing numerous human rights violations and environmental harms at the Kingfisher oil project sites in Uganda. Similarly, Uganda’s Tilenga oil fields also face scrutiny over their ecological and social harms, including impacts on wildlife and displacement of local communities. Both Kingfisher and Tilenga are co-owned by French oil and gas giant TotalEnergies, the Chinese National Offshore Oil Company Uganda Ltd. (CNOOC), and the Uganda National Oil Company (UNOC). Both projects are also part of the East African Crude Oil Pipeline initiative (EACOP), where TotalEnergies is a major partner. The initiave aims to transport oil and gas from Uganda to Tanzania for export.
https://news.mongabay.com/short-article/2024/10/ngos-urge-banks-and-china-to-ref...Uganda finally signs deal to start building 1,700km railway, dumping China
(Global Construction Review, London, 15 October 2024) After 9 years of striving, the government of Uganda yesterday signed a contract with Turkish contractor Yapı Merkezi to build the first section of the country’s standard gauge railway. The €2.7bn deal was formalised in the capital Kampala by Bageya Waiswa, the permanent secretary for public works, and Erdem Arıoğlu, the vice chair of Yapı Merkezi. Waiswa said Uganda would use its own funds and loans from the UK’s Standard Chartered bank, backed by export credit guarantees, to finance the project. The deal follows a number of false starts. As far back as 2015, Uganda entered into an agreement with China Harbour, a subsidiary of China Communications, to implement the project, on the condition that Chinese capital would be made available to pay for the work. The reluctance of China’s Export–Import Bank to finance the scheme led Uganda last year to abandon the contract, clearing the way for the Turkish deal.
https://www.globalconstructionreview.com/uganda-finally-signs-deal-to-start-buil...Hyundai gets $1.35B in export financing for Georgia EV facility
(Korea Joongang Daily, Seoul, 16 October 2024) The Korea Trade Insurance Corporation granted $1.35 billion in export financing to Hyundai Motor's $5.5 billion EV manufacturing facility in Georgia, which began partial operation in early October. The financing was decided to help Hyundai "strengthen its global competitiveness by offering financial support to its EV manufacturing facility in North America, one of the biggest auto markets in the world," the state-run export credit agency said Wednesday. The factory in Bryan County, Georgia, is the automaker's first EV-dedicated manufacturing plant in the United States. It recently started partial production, around six months ahead of schedule, in order to rapidly qualify for the U.S. government tax credits of up to $7,500 for EVs assembled in North America.
https://koreajoongangdaily.joins.com/news/2024-10-16/business/industry/Hyundai-g...European ECAs reach out to Indian companies, banks
(Economic Times, Delhi, 24 October 2024) The Export Credit Agencies (ECA) of Germany (Euler Hermes), Austria (OeKB) and Switzerland (Swiss Export Risk Insurance SERV), together with the Swiss Business Hub India and Switzerland Global Enterprise, on Thursday reached out to Indian companies, banks and government institutions for opportunities for investment and cooperation.
https://economictimes.indiatimes.com/news/economy/foreign-trade/3-european-expor...What did Cuba do with the €1.2 billion offered by Russia to build thermoelectric plants?
(Ciber Cuba, Miami, 18 October 2024) According to the agreement approved in 2015 by both governments, the resources would be invested in the construction of four generation units of 200 MW for two thermal power plants. In 2022, the regime quietly admitted that it had not met the conditions to access the loan. In September 2022, the Deputy Minister of Energy and Mines stated that Cuba had not been able to access the Russian credit of 1.2 billion euros for thermoelectric plants as it had not managed to secure the 10% upfront payment (120 million) needed to access this credit. [The US embargo affecting Cuban dollar earning exports undoubtedly had a major influence on this.]
https://en.cibercuba.com/noticias/2024-10-18-u1-e207888-s27061-nid290398-hizo-re...