Report reveals EU Member States’ lagging commitment to Paris Agreement goals in export credit policies

Brussels, 4 April - A report titled "EU ECA fossil fuel phase-out tracker" by Both ENDS, Counter Balance, and Oil Change International sheds light on the concerning lack of harmonised alignment of Member States' export credit financing with the EU’s climate commitments.

Despite increasing global efforts towards sustainability, export credit agencies (ECAs) play a key role in providing loans, guarantees and insurance from public budgets to support companies from their countries, including polluting industries. At present, ECAs continue to be the world’s largest international public financiers of fossil fuels, sorely misaligned with climate goals.

In March 2022, during the French Presidency of the Council of the EU, Member States made an important commitment to determine science-based deadlines by the end of 2023 for ending export credit finance for fossil fuel energy projects. As the reports from the Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA) point out, no new oil, gas or coal can be developed beyond the existing fields in order to keep 1.5°C within reach.

Yet, the recent findings reveal that only 13 out of the 23 EU Member States with ECAs appear to be fulfilling their obligations, while the others are lagging behind.

The report’s findings show that only eight EU Member States, such as Denmark, France and the Netherlands, have come up with policies to phase out public support for fossil fuel projects. Five countries, including Bulgaria, Estonia, Lithuania, Poland and Portugal, have no formal policy but claim not to finance such projects. However, 10 Member States are failing to honour their commitments. Some, such as Croatia, the Czech Republic and Greece, have yet to establish a policy to phase out export credit support for fossil fuels. Others, such as Italy and Austria, have published policies that are far from being in line with climate science and the mandatory 1.5°C pathway.

In fact, in 2023 alone, Italy greenlit financing totaling nearly €1,7 billion for five fossil fuel projects. Its fossil finance policy, unveiled at the beginning of the year, contains the most significant exemptions for fossil fuels compared to other signatories to the global Clean Energy Transition Partnership and Export Finance for the Future (E3F).

Marius Troost at Both ENDS, says: “To stay within the 1.5°C limit, we must halt funding for fossil fuel projects. Despite EU Member States' agreement in 2022 to cease public support for oil and gas projects via export credits, not all have followed through. It's time for non-compliant countries to match commitments with action by implementing climate policies grounded in science. This issue will be addressed at an event on April 25th, where we hope to see laggards elevate their ambition”.

Alexandra Gerasimcikova at Counter Balance says: "For many Member States money continues to flow towards problems rather than solutions and this will only change with accountability for setting science-based, not science-interpreted, targets. The governments continue to avoid making the needed changes to our energy, housing and industrial systems that are our only way out of climate change, instead catering to the interests of big polluting companies. We need public finance that supports renewable and sustainable energy, climate and technological solutions based on societal needs, not profit maximisation. Public support for polluting corporate greed must end."

The report calls for swift and decisive action by all Member States to align export credit policies with the imperatives of climate justice and sustainable development, especially by those who have not yet implemented the 2022 Council conclusions and not presented a science-based deadline.