However, renewed mandates for innovation and industrial policy as well as green growth opportunities allow the setting of more ambitious targets. Furthermore, there are barriers and risks such as conflicting principles of intervention and limited capacities. Klasen: Given that industries supported by ECAs are often relatively emissions intensive, it makes it more difficult to be part of the transition to decarbonisation. GTR: Is 2050 soon enough for net zero? Is it within the capability of some ECAs to adopt more ambitious targets such as 2030 as we have seen with several private financial institutions? I expect that other agencies will rapidly catch up – existing work from governments and ECAs creates a strong basis to build on!
EDC’s announcement of a long-term net zero target represents a notable milestone for the sector. They are lagging behind countries, the corporate sector, and private finance institutions. Klasen: Export credit agencies play an important role in the transition to a net zero global economy. GTR: Do you expect further ECAs will follow Export Development Canada’s lead and announce a net zero target before the COP26 summit?
He discussed the paper in an interview with GTR. One of the report’s authors, Professor Andreas Klasen, director of the Institute for Trade and Innovation at Germany’s Offenburg University, suggests that the European Union and 10 countries that form the OECD Arrangement on Officially Supported Export Credits could collaborate to become “net zero pioneers”. ECAs provide government-backed financing, guarantees and insurance, sometimes in concert with other lenders. Many countries have adopted net zero targets, usually by 2050, but the report says ECAs “are only at the beginning stages of this seismic transformation” and that none have adopted a net zero framework and implementation plan “comparable to the commitments emerging at the policy level and amongst private financial institutions”.Ī lack of momentum from ECAs risks damaging the energy transition because they play a key role in financing some crucial sectors, the report argues. The move is significant because the agency has long been a major backer of fossil fuel projects thanks to Canada’s large natural resources sector. It is aiming to reach neutral emissions from its operations by 2030 and net zero for its portfolio by 2050. Seven European countries announced in April they intend to wind down finance to fossil fuels and boost sustainable financing, but stopped short of setting emissions reduction targets.Įxport Development Canada became the world’s first ECA to set a net zero target late last month.
That’s the argument of a University of Oxford paper published last week by a group of five researchers, including experts in trade, law and economics.įormer Bank of England governor Mark Carney says in the paper’s foreword that ECAs “are increasingly conspicuous by their absence” in efforts by financial institutions to back a transition away from fossil fuels. Related News Bank in row with asset manager over trade finance write-downs Despite bounce back, trade credit insurance industry sketches uncertain outlook EDC launches sustainability guarantee programme, signs up first bank Berne Union forms climate change action working group Credendo mulls €4bn Russia exposure, joint venture as export credit agencies feel pinchĮxport credit agencies (ECAs) are lagging private financial institutions in setting targets for reaching net zero greenhouse gas emissions and are missing opportunities as the energy transition gets underway.
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