Export Credit Agencies and Global Energy: Promoting National Exports in a Changing World

Abstract

This article introduces export credit agencies (ECAs) as highly influential actors in international trade and global energy development. In the energy sector, official export financing stimulates international trade in energy-related technologies and promotes energy development in countries associated with high political risk. Adverse competition between ECAs has produced a demand among governments and other actors for international governance. The article explores the origins and effectiveness of international rules, and identifies three challenges to the current OECDcentred governance arrangements. First, the growing influence of ECAs from non-OECD countries is challenging the legitimacy and effectiveness of the OECD as an institutional venue for negotiating rules. Second, there are growing tensions between the national economic objectives that underpin the mandates and operations of ECAs, and their global implications. And third, as official export financing overwhelmingly benefits large-scale, carbon-intensive energy development, a number of ECAs have been criticized for undermining efforts to place developing countries on a more sustainable energy path. The article is pessimistic about the prospect of fundamental reform, as aligning official export financing with global policy objectives may require governments to enact fundamental changes to the mandates and structures of ECAs that compromise their effectiveness as instruments of national export promotion. Policy Implications• The growing influence of non-OECD countries in the international market for official export financing will generate new demands for international rules from governments and other stakeholders.• Given the global impacts of ECAs, it will become increasingly difficult for governments to insulate themselves from pressures to align their mandates and activities with broader sustainable development objectives.• The role of official export financing in the energy sector demonstrates the extent to which mitigating global climate change requires a better integration of international trade and climate policy.• As more and more countries establish ECAs, it will become increasingly difficult to reach a consensus on international rules.• When benefiting exports related to oil, gas and coal-based power generation, official export financing reduces the capital costs of large-scale fossil fuel-based energy development in developing countries.• The 'greening' of official export financing in the energy sector would be accelerated by fiscal and regulatory policies in both exporting and importing countries that are favourable to clean technology and renewable energy companies.This article aims to introduce export credit agencies (ECAs) as highly influential actors in international trade and global energy development. Today, more than 50 governments use ECAs to support national exports of large-scale equipment and technology, including in the energy sector (Gianturco, 2001;Singh, 2009;Stephens, 1999). When exporters have access to official export...

Problems with Long-term Financial Sustainability of Export Credit Agencies

“…There are, of course, not only positive articles about the infl uence of ECAs. According to Wright (2011), ECAs support the fi nancing of countless large-scale, carbon-intensive energy projects such as coal power plants, and this has a very negative impact on developing countries during the process of building a self-suffi cient and, more importantly, sustainable and clean energy production infrastructure. It must also be mentioned that support to carbon-based energy projects has already been banned as it has a negative eff ect on the environment.…”

The Club‐based Climate Regime and OECD Negotiations on Restricting Coal‐fired Power Export Finance

“…Nevertheless, changes in OECD ECA rules were primarily incentives for renewable exports rather than restrictions on carbon‐intensive exports, the latter of which was more politically difficult for OECD countries, particularly the United States, to achieve. A more fundamental challenge as Wright (2011, p. 140) describes, was that as a financier, ECAs are ‘ill‐positioned to tackle global commons problems’ such as climate change. Put simply, ECAs operate under market‐based incentives; their lending follows demands in developing countries, which continue to favor low cost energy projects with high carbon intensity and environmental costs.…”

How Rising Powers Create Governance Gaps: The Case of Export Credit and the Environment

“…Given that financing often represents a significant portion of a large capital goods transaction or infrastructure project, even modest government credit subsidies could be a decisive factor in awarding a bid -and, indeed, in determining the feasibility of a project. Without global regulation, the natural tendency would be for states to offer increasingly higher subsidies in an effort to give their exports an advantage in global markets, distorting trade flows and triggering a subsidy war (Wright 2011).…”

“…Public stakeholders and NGOs became increasingly vocal in calling for ECAs not to support projects that harm the 1 Interviews with ECA officials, July 2015 and June 2016. environment or adversely affect local communities. Civil society actors waged a large-scale transnational advocacy campaign that pressed OECD countries to accept that ECAs should promote compliance with international environmental and social standards (Schaper 2007;Wright 2011). There was recognition that unilateral action on the part of individual states would not be sufficient; global action was needed, involving all the major providers of export credit.…”