2023-07-04
Feasibility study on export credits misses the mark
Financial flows, including state supported export finance, need to align with climate goals if we are serious about tackling climate change. Many European countries have taken steps to phase out fossil fuels from international public finance, but a newly released European Commission study concerning a reform of European export finance fails to take cue from the forerunners.
Following its 2021 Trade Policy Review, and a recent call from the Council of the EU for a reform of EU export credits, the EU Commission initiated in 2022 a feasibility study on a reform of export credits. The study was recently released, and although it addressed several challenges concerning export finance, the most urgent one – aligning export finance policies with climate goals – was not one of them. This despite a recognized need to phase out of fossil fuels from export finance systems, as illustrated by net-zero scenarios, climate transition research and other efforts to align export finance to climate mitigation goals.
“The absence of climate change in a 122-page study about an extensive reform of European export finance contradicts EU climate and environmental policy objectives and ignores the ongoing climate crisis and the necessity to tackle climate change”, says Davide Maneschi, programme office climate change at Swedwatch.
“In addition, it fails to acknowledge several inter-governmental and international initiatives taking place to modernize export credits and align export finance to climate change goals, such as Export for Finance Future (E3F) and the Glasgow Statement on International Public Support for the Clean Energy Transition, in which several EU countries commit to phase out fossil fuels.”
In the study, the European Commission’s main concern seems to address a perceived “un-level playing field” caused by unfair export finance practices by non-OECD countries. This despite repeated calls from civil society on the need to put climate change front and center of an EU export credit reform during the consultation for the preparation of the study.
“A reform of European export credits cannot ignore the climate emergency and the international commitments to align financial flows with a low-carbon economy”, says Davide Maneschi.
Swedwatch calls for the Commission´s policy initiative – that follows on the feasibility study – to prioritize the climate and ensure the alignment of European export credits to the EU policy objectives, its climate commitments and the global warming limits of the Paris Agreement, and on the Council of the EU and the Parliament to ensure this alignment.
A necessary first step to achieve export finance climate alignment is to end export support for fossil fuels.
More from Swedwatch on the topic:
The EU must urgently review its outdated policy on export credits