Title : Aligning officially supported export finance with the paris agreement
Abstract:
Countries around the world have Export Credit Agencies (ECAs), government-backed finance institutions (FI) that provide financial support such as loans, insurance and guarantees to exporters of goods and services from a domestic creditor economy to a debtor economy abroad. As government-backed institutions, ECAs bear the political mandates and international commitments of their respective governments, including those under international treaties such as the Paris Agreement. However, many countries still provide significant amounts of financial support (tens of billions of US dollars) to fossil fuel projects from exporters through their ECAs, which increases greenhouse gas (GHG) emissions and thus contributes to climate change. In this light, Perspectives Climate Research developed the first methodology to assess and compare ECAs and their governments regarding their alignment with the Paris Agreement. The development of the methodology was based on benchmarking of existing Paris alignment approaches for financial institutions, which allowed to select and tailor the most relevant components of these approaches to the specificities of ECAs. The methodology has been applied to the five countries – Canada, Germany, Japan, the Netherlands, the UK. Only the UK scored ‘some progress’ towards Paris alignment while others were scored ‘unaligned’. Five additional country case studies are currently underway. This research identifies remaining gaps as well as best practices in aligning ECAs with the Paris Agreement. The results of this research are feeding into policy discussions on reforming the export finance system – both on the international level, e.g., through the OECD Arrangement on officially-supported export credits, and on the level of national ECA policies – with the aim of fully aligning export finance with the Paris Agreement.
