(Korea Times, Seoul, 29 November 2022) The government is aiming to make Korea-produced batteries account for at least 40 percent of global market share by 2030, as assisted by the establishment of an intergovernmental alliance to secure key battery materials, fostering a sustainable industrial ecosystem and expansion of tax credits, the trade ministry said Tuesday. The government will form and strengthen alliances with resource-rich countries, including Australia, Canada and Chile. Materials secured from the three countries will be refined there, or in nearby countries with which the U.S. has a free trade agreement. Up to 3 trillion Won in loans and guarantees will be provided over the next five years for industry players investing in refining and smelting projects, as mediated and overseen by Korea Trade Insurance Corp., an export credit agency and Export-Import Bank of Korea (Eximbank), a state-run lender.
Newsletter
CSOs demand reduced OECD ECA support for oil and gas
(Price of Oil, Washington, November 2022) This document signed by 54 international civil society organizations outlines how the OECD Arrangement on Officially Supported Export Credits can align with the Paris Agreement warming target of 1.5°C by placing restrictions on export support for oil and gas projects and associated infrastructure. These restrictions build on the existing prohibition on coal-fired power, which came into effect 1 January 2022 and was preceded by the coal-fired power sector understanding (CFSU).
There’s no time to waste — public capital is a key conduit to a just transition
(Atlantic Council, Washington, 8 November 2022) It is abundantly clear that achieving net-zero carbon emissions by mid-century is necessary to avoid the worst climate outcomes. However, the path to decarbonizing the energy sector is not “one-size-fits-all” between developed and developing markets.Looking at the future energy mix globally, new renewables capacity will dominate with developing countries representing more than half of new capacity investment, driven primarily by China and India. Public capital plays an essential role in accelerating energy infrastructure projects in both developed and developing markets. Governmental organizations such as export credit agencies (ECAs) and development finance institutions (DFIs) provide essential liquidity tools, risk management expertise, and credit support that enables meaningful private sector investment.
UKEF to offer ECA support for most vulnerable climate change countries
(Reuters, London, 8 November 2022) Britain plans to offer new loans to support countries most vulnerable to the effects of climate change, including the option to defer debt repayments in the event of catastrophes, the finance ministry said on Tuesday. The country’s export credit agency, UK Export Finance (UKEF), will provide such loans to low-income countries and small island developing states. Details of the plans will be given at the COP27 climate summit in Sharm el-Sheikh, Egypt. The proposals would allow vulnerable countries to defer debt repayments to free up resources to fund disaster relief, the ministry said. Reuters has noted that promises by companies, banks and cities to achieve net-zero emissions often amount to little more than greenwashing according to the UN as it set out proposed new standards to harden net-zero claims. With the world in the midst of the first global energy crisis – triggered by Russia’s invasion of Ukraine – the IEA’s World Energy Outlook 2022 (WEO) provides indispensable analysis and insights on the implications of this profound and ongoing shock across the globe.
Canada 2nd in the G20 for fossil fuel subsidies
(The Saxon, Salisbury, ? November 2022) Canada continues to heavily subsidize fossil fuels despite its international commitments, according to a report by Oil Change International. The nonprofit estimates that Canada has, on average, given up to US$8.5 billion annually to projects related to this type of energy between 2019 and 2021. Among G20 countries, Canada is the second most publicly funded fossil fuel project. Only Japan spends more, with an annual average of US$10.6 billion. South Korea and China complete the front runners with US$7.3 billion and US$6.7 billion respectively in subsidies to the fossil fuel sector. France, Brazil and Germany lead the G20 in green energy subsidies, with US$2.8 billion, US$2.5 billion and US$2.2 billion, respectively. Canada, meanwhile, spends about US$800 million.
European countries back weakened ECA fossil fuel financing pledge
(Financial Management Magazine, Durham, 4 November 2022) As noted in our October What’s New, ten European countries had agreed to spell out this year how they will limit export finance support for overseas fossil fuel projects. But they shelved a draft pledge to explicitly end it after pushback from Italy. The final statement was weaker than a previous draft seen by Reuters. At the UN COP26 climate summit in November 2021, 39 countries and financial institutions, including the Netherlands, signed the Glasgow Statement on International Public Support for the Clean Energy Transition, committing signatories to end their direct international public financing for fossil fuels by the end of 2022, except in exceptional circumstances, and fully prioritize their public finance for clean energy transition. If all signatories followed through on their pledges with integrity, this could directly shift US$28 billion a year from fossil fuels to clean energy and help shift even larger sums of public and private money away from investments in climate-harming fossil fuels. International and Dutch NGOs now argue that the new policy published by the Dutch Government on restricting finance for fossil fuels has such significant loopholes, that it essentially means the Netherlands has reneged on its promise. The Dutch government said it intends to stop giving companies and banks credit insurance for exports in the fossil fuel sector as of Jan. 1, following through on a pledge made at the COP-26 climate conference in Glasgow. When the pledge was announced in 2021, the Cabinet said it did so knowing it would put Dutch exporters at a competitive disadvantage to exporters in countries that do still offer such insurance and the Finance Ministry said the Netherlands might reconsider the policy if other countries fail to adhere to their COP-26 pledges. According to Statistics Netherlands (CBS), petroleum and petroleum products made up 9.3% of Dutch exports in 2021, with a trade value of 54.7 billion euros. Around 20 countries including Germany, the United States, Britain and Canada made similar commitments, but only a few including France have so far implemented them into policy. On the other hand, Australia chose not to sign the Glasgow Statement at a public event held at Cop27 in Sharm el-Sheikh.
ECAs are the worst public finance supporters of fossil fuels over clean energy
(Oil Change International, Washington, 1 November 2022) OCI’s new report “At a Crossroads: Assessing G20 and MDB international energy finance ahead of stop funding fossils pledge deadline” looks at G20 country and MDB traceable international public finance for fossil fuels from 2019-2021 and finds they are still backing at least USD 55 billion per year in oil, gas, and coal projects. This is a 35% drop compared to previous years (2016-2018), but still, almost twice the support provided for clean energy, which averaged only $29 billion per year. ECAs were the worst public finance actors, providing seven times more support for fossil fuels than clean energy – at least $34 billion per year for fossil fuels and just $4.7 billion for clean energy. The report analyzes finance from OCI’s open-access database, and Public Finance for Energy’s Database (energyfinance.org), which have been updated alongside the release of this report. It tracks financial flows to fossil fuels and clean energy from G20 bilateral development finance institutions (DFIs), export finance agencies (ECAs), and the multilateral development banks (MDBs). The report from OCI and Friends of the Earth US has been endorsed by a long list of international civil society organizations.
Friends of the Earth US asks Biden to “RELEASE THE GUIDANCE!”
(Friends of the Earth US, Washington, 24 October 2022) Friends of the Earth US has produced a 16 page backgrounder on U.S. international energy finance ahead of the COP27 Deadline to Stop Funding Fossils. From 2010 to 2021, the United States’ major trade and development finance institutions, the U.S. Export Import Bank (EXIM) and U.S. International Development Finance Corporation (DFC), provided almost five times as much support to fossil fuels as to renewables – USD 51.6 billion compared to USD 10.9 billion. Since taking office, the Biden-Harris Administration have made a series of commitments, executive orders, and guidances towards ending this international public finance for fossil fuels. Unfortunately, the administration’s actions have yet not matched their promises on ending these influential financial flows that prolong the fossil fuel era. In this briefing, Friends of the Earth USA review what is known about the current U.S. policy guidance, unpack trends in recent energy finance from EXIM and DFC, identify specific fossil fuel projects and loopholes that appear to be under consideration, and make recommendations for how the U.S. can still implement their commitments with integrity and on time. Most critically, Biden’s interim guidance detailing how these promises will be implemented has not been made publicly available since it was put in place in December 2021, and it appears to leave substantial loopholes open for continued support for gas and oil. The Biden-Harris Administration can avoid undermining international progress on this issue by releasing a publicly available policy that fully ends international public finance for fossil fuels by COP27 in November.
South Korean ECAs challenged during National Assembly session about Barossa Project
(Friends of the Earch US, Washington, 24 October 2022) During the annual National Assembly audit this month, Korea Export-Import Bank (KEXIM) and Korea Trade Insurance Corporation (K-SURE) were questioned by assembly members on their decision to finance the Barossa gas project in Australia. The Barossa project, spearheaded by Australia’s Santos and Korea’s SK E&S, was recently ordered to halt drilling after the Australian Federal Court decided Traditional Owners had not been properly consulted. While both KEXIM and K-SURE have approved a total of USD 660 million (KRW 800 billion) of additional financing for the project, the financial deal has not been closed yet. During this year’s National Assembly audit session, K-SURE was reprimanded for violating international environmental regulations and was questioned on the Ministry of Environment’s greenwashing ruling around SK E&S’ advertisements about Barossa gas. K-SURE stated that it screened the project in accordance with international guidelines and Australian law. It also claimed that if Santos loses its Barossa drilling appeal heard at the Australian Federal Court, it will likely decide whether to proceed with its financing. A hearing from a National Assembly member revealed that K-SURE was aware of the lack of Indigenous consultation but relied on the words of project owners and commercial banks supporting the gas project, showing a passive review process in deciding to provide billions of wons’ worth of taxpayer money. With continued criticism from assembly members, the Chairman of K-SURE stated that the agency will comprehensively review various risks associated with the project before deciding whether to extend the expiration date of its financing approval, which is January 2023. Environmental activists have continued to demand the cancellation of public financing toward the Barossa gas project.
Cesce and Alstom sign a strategic agreement to promote green exports
(WebWire, Atlanta, 12 October 2022) Cesce, the Spanish Export Credit Agency, will support France’s Alstom Group’s export activities focused on green projects with a dedicated amount of €500 million. -The agreement seeks to strengthen and consolidate the Spanish railway industrial footprint, in which Alstom is a key player with more than 3,000 employees in Spain and a volume of local purchases close to 700 million euros in the last year. The agreement provides for an overall annual maximum of €500 million and will be reviewed on a yearly basis, depending on the evolution of employment levels, investment and exports of Alstom Group companies in Spain. The agreement’s scope focuses on green operations, in line with Cesce’s climate change policy, the importance of promoting sustainable mobility initiatives and the need to boost digitalisation and sector transformation for a decarbonised future.
