Export Credit Agencies

During the 1990s, Export Credit Agencies (ECA) financing through loan, project guarantees and investment insurance averaged estimated US$ 80 - 100 billion/year, roughly twice the levels of official development assistance provided during the same time.

There is growing awareness of potentially insured social and environmental impacts of activities financed by ECAs: During the Denver-G-8 Summit in 1997, it was concluded that ECAs should adopt “sustainable practices by taking environmental factors into account when providing financial support for investment in infrastructure and equipment”, and during the G-8 Summit in 1999, it was agreed to work towards a set of common guidelines among the ECAs of the 8 countries. In line with this, OECD Ministers issued a mandate to “strengthen common approaches of Export Credit Agencies”. An OECD Working Party on Export Credit Agencies and Credit Guarantees is working to achieve this goal. So far, the negotiated draft common approaches have not been adopted.

Environmental and social impacts of ECA activities are under public scrutiny by environmental NGOs and research institutes.

UNEP Energy, in close cooperation with the UNEP Finance Initiatives (FI), is supporting the work of the OECD Working Party by providing substantial information on how private banks and insurers assess environmental risk within their business operations. At a joint workshop, hosted by the French ECA, Coface, some 70 participants from Export Credit Agencies (ECAs), banks and insurers – which facilitate USD billions of trade annually. The two day workshop, brought together, for the first time, underwriters, private sector financiers, environmental experts and the United Nations, to discuss environmental issues relevant to finance. In particular, the meeting looked at how to facilitate the implementation of project screening - already adopted by many of the respective institutions.

Briefings
"Making it Happen: Renewable Energy Finance and Role of Export Cerdit Agencies"

With a mandate to facilitate exports from their respective countries, Export Credit Agencies (ECA) can play an important role for sustainable development - through, for example, supporting exports of renewable energy products that help provide access to clean energy services in developing countries.

So far, only a very small portion of ECA business goes into renewable energy projects and the sales of renewable energy technology (equipment and services). This is due to different barriers, some sector specific and others more general in nature: the technology is still rather young, many potential exporters are SMEs less familiar with exports to non-OECD countries, often project size is small making for relatively high transaction costs, lack of level-playing field with conventional energy technologies and projects, political and commercial risk in the buyer country. In addition, certain provisions in the OECD Arrangement on Officially Supported Export Credit - under which ECAs operate - seem to pose barriers to financing renewable energy projects.

This document looks at if and how ECAs or their guardian authorities can help break down these barriers, either directly by tailoring products to renewable energy project specificities or by making appropriate changes to the Arrangement...download this document (pdf 297kb)