In the run-up of COP26 in Glasgow in November, the two case studies demonstrate that officially supported export finance of two major exporting economies is not aligned with the Paris Agreement and keeps contributing to carbon lock-in through supporting fossil fuel investments. While officially supported export finance in the Netherlands advanced in some assessment dimensions, both countries received the overall score ‘Unaligned’ – mostly due to lacking ambition for phasing out support for fossil fuel value chains.
Perspectives Climate Research (PCR) developed a tailor-made Paris alignment methodology for Export Credit Agencies (ECAs). This methodology assesses ECAs and their respective governments based on 18 key questions across five dimensions: transparency, the ambition of fossil fuel phase out policies, overall climate impact of the ECA, its contribution to the global climate transition as well as on the outreach and ‘pro-activeness’ of the ECA and its government. In line with latest climate research, the ambition of fossil fuel phase out policies is the most heavily weighted dimension. Overall, an ECA can receive the label ‘Unaligned’, ‘Some progress’, ‘Paris aligned’ or ‘Transformational’.
The methodology was ‘road-tested’ on the German ECA Euler Hermes. Since July 2021, PCR applied the finalized methodology to two further case studies – the Netherlands and Japan. An update of the German case study as well as further studies on Canada and the United Kingdom will be released soon.
The Netherlands: Atradius Dutch State Business
Atradius DSB was rated with ‘Unaligned‘ towards alignment with the Paris Agreement (assessment score 0.49/3.00) – at the upper threshold to ‘Some progress’. The full case study can be found here.
Japan: Nippon Export and Investment Insurance and Japan Bank for International Cooperation
The two official ECAs in Japan – NEXI and JBIC – were assessed and rated as ‘Unaligned‘ with the Paris Agreement (assessment scores: NEXI: 0.02/3.00 and JBIC: 0.05/3.00). The full case study can be found here.
“The latest climate science unequivocally points to the need to cease new investments in the supply of fossil fuels and related value chains in order to keep global warming under 1.5℃. In stark contrast to science and their own commitments under the Paris Agreement, Japan and the Netherlands continue supporting investments in fossil fuel value chains through their Export Credit Agencies contributing to carbon lock-in. In this light, our studies identify key gaps in the Paris alignment of export finance in these countries and provide concrete recommendations for reforms. We urge governments of Japan and the Netherland – as well as other major exporting economies – to use COP26 in Glasgow to announce concrete commitments to phase out fossil fuel support from official export finance in line with the latest climate science”, says Igor Shishlov, Senior Consultant at Perspectives Climate Group and project manager of the research program on Export Credit Agencies.
The press release can be found here.