The UK and ten major trading partners have agreed to end export credit support for unabated coal-fired power plants
In principle, the agreement will ensure that exporters in Organisation for Economic Co-operation and Development (OECD) member countries will be unable to apply for export credit and tied aid support for:
- new coal‑fired power plants without operational carbon capture, utilisation and storage (CCUS) facilities; and
- existing coal-fired power plants, unless the purpose of the equipment supplied is pollution or CO2 abatement, and such equipment does not extend the useful lifetime or capacity of the plant, or unless it is for retro-fitting to install CCUS.
The agreement was signed by 11 OECD members who subscribe to the OECD Arrangement on Officially Supported Export Credits, and it will take effect after each signatory has completed its formal, internal decision-making process, which is expected by the end of this month.
In addition to the UK, the group includes Australia, Canada, the European Union (EU), Japan, South Korea, New Zealand, Norway, Switzerland, Turkey, and the United States.
The deal was announced on Friday last week, ahead of the forthcoming United Nations (UN) Climate Change Conference, COP26, which will take place in Glasgow, Scotland from October 31 to November 12.
Anne-Marie Trevelyan, international trade secretary and UK international champion on adaptation and resilience for the COP26 presidency, said the agreement marks an important breakthrough for global action on climate change.
“After a series of tough negotiations over many months, our firm action to decarbonise our export credit support is now being met by our trading partners,” she said.
“The UK has led the way on climate action internationally, as the world’s first country to end support for overseas fossil fuel projects and legislate net zero.”
As the current president of the G7 for 2021, the UK ended all financial support for overseas fossil fuel projects in March this year, and is encouraging international partners to do the same.
The country’s export credit agency, UK Export Finance (UKEF), has helped align the climate change commitments of export credit agencies in the OECD with the UK’s position on fossil fuels.
“There is more to do: we will continue to make the case that action is needed now to align our finance behind green trade to protect our planet,” Trevelyan added.
UKEF operates under international standards set by the OECD to ensure exporters do not gain an unfair competitive advantage on the international stage.
As the UK’s export credit agency and as a government department, UKEF works alongside the Department for International Trade as an integral part of its strategy and operations.
Established in 1919, UKEF provides insurance, guarantees, and loans to exporters.
As of the time of writing, UKEF has extended £2 billion of direct lending to financing clean growth projects, and over £50 billion of capacity for exporters to tap into.
All support provided by UKEF is on commercial terms, generating a return for the UK taxpayer.
