Despite promises to make financial flows consistent with a low-carbon economy, EU member states continue to provide financial support to the fossil fuel industry through export credits. It is time that the EU Commission replaces its outdated policy with new and ambitious regulation, prohibiting export support to oil and gas, Swedwatch argues in a new policy paper. 

“Export credit agencies are the world’s largest international public financiers of fossil fuels. In the EU, the lack of an ambitious regulatory framework allows for oil and gas projects to continue to be supported through state-backed export finance, undermining EU contributions to climate goals. This gap needs to be urgently addressed“, says Davide Maneschi, climate change program officer at Swedwatch. 

Export credit agencies (ECAs) have a critical role in the energy transition, as they de-risk large scale infrastructure and energy projects. However, in the period 2019-2021, some six years after the Paris Agreement was signed, G20 export credit agencies provided seven times more support for exports of fossil fuel projects than for clean energy. Between 2015 and 2020, ten of Europe’s largest ECAs granted support for about €30 billion to fossil fuel-related activities. While some EU member states prohibit this kind of support, others continue to allow for state-backed investments in fossil fuels. Recently, Italy adopted a new policy allowing for continued support to oil and gas for many years to come and Germany has not yet adopted a policy which is coherent with its climate commitments.  

“Even if a few EU countries have taken the initiative to phase out fossil fuel support from export finance, the EU has a key role to play in implementing a policy that puts an end to fossil fuel-related export finance by all member states. This would ensure that the EU is at the forefront of the climate transition, and create a level playing field for national ECAs”, says Davide Maneschi 

In a policy paper published today (April 27 2023), Swedwatch calls on the European Commission to promptly initiate a reform of  the regulatory framework on the activities of ECAs, ensuring that they are aligned with the Paris Agreement 1.5°C climate change mitigation goals and EU climate objectives. The framework needs to be accompanied by strong policy measures accelerating climate finance and contributing to a just energy transition towards a low-carbon and climate-resilient development. 

“EU governments and public entities must use public finance to prioritize investments that truly address the climate crisis and forward climate justice. This includes a stop for support to the fossil fuels industry and the promotion of a just energy transition with human rights at the centre.” 

In the policy paper, Swedwatch also calls on the EU to beware false climate solutions and ensure that unproven and potentially counterproductive fossil-fuel based technologies do not receive favourable export finance support. Carbon capture and sequestration, carbon markets, hydrogen and ammonia are often purported as solutions to climate change but can in fact increase dependence on fossil fuels and delay the phaseout of coal, oil, and gas.  

Key recommendations to align EU export credit policies with a low-carbon economy and to prevent and mitigate human rights impacts. Download the report for a full set of recommendations.

To the EU Commission:
✔️Promptly initiate a reform of the EU’s regulatory framework on the activities of ECAs.
✔️If created, an EU export credit facility should exclude all support to fossil fuel projects and adopt the highest standards of national ECAs in terms of environmental and social due diligence.
✔️Adopt regulations to introduce high standards of human rights and environmental due diligence for the activities of ECAs.
✔️ Ensure that potentially counterproductive fossil-fuel based technologies do not receive export finance support. 

To the Council of the EU:
✔️Act upon the objectives of the March 2022 Council’s Conclusions on officially supported export credits, ensuring that all Member States publicly disclose plans for phasing out fossil fuels from export finance. 

To the EU Parliament:
✔️Work with the Commission and the Council to align the activities of export credit agencies with EU climate commitments and international human rights frameworks.

To EU national governments and the export credit agencies:
✔️Adhere to and implement the commitments made under E3F and the Glasgow statement, and work to shift international financial flows towards a low-carbon economy, while safeguarding human rights.

Download the report: 

Omslag Export Policy Paper

Even if a few EU countries have taken the initiative to phase out fossil fuel support from export finance, the EU has a key role to play in implementing a policy that puts an end to fossil fuel-related export finance by all member states. 

More on the topic:

Civil society organisations endorse proposal for the OECD to end export finance support for oil and gas

The Swedish Export Credit Agency must be able to decline import guarantees if risks of adverse environmental impacts (in Swedish) 

Time for Swedish leadership in carbon-free export finance

Press contact:
Ami Hedenborg, Media Manager