Are public banks gaslighting on climate finance? Analysing policies governing gas infrastructure

As emissions reach record levels, governments must implement and strengthen climate policies for the global pathway to net‐zero emissions by 2050. Climate finance plays a crucial role in the net‐zero transition. It refers to local, national, or transnational financing seeking to support mitigation and adaptation actions that address climate change. Public export–import banks (EXIMs) and government export credit agencies (ECAs) are highly influential actors for climate action. Although there is no consensus among EXIMs and ECAs on how to define climate finance, 20 institutions assessed in this research give evidence that they strongly support climate‐action‐related transactions: EXIM and ECA financing, guarantees, and insurance amounted to EUR 6.7–8.4 billion in 2020, much more than estimated by the Climate Policy Initiative (CPI). However, the results also reveal that EXIM and ECA lending, guarantee, and insurance activities must rise substantially in order to contribute to climate finance volumes required by 2030 as estimated by CPI. To retain their current proportion relative to other climate finance flows, assessed institutions would need to increase their climate financing 6.8 times to up to EUR 57.4 billion by 2030.

Chapter 11 - Political Risk Guarantees, Insurance, and Finance

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 OECD-centred 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 chapter focuses on export credit agencies (ECAs). ECAs are government-backed suppliers of financing and other credit support. As enablers of government policy and ‘soft diplomacy’, they possess a variety of tools that are not available to commercial financial institutions alone. Among the most important of these tools is the ability to offer financial terms that are more competitive than those available in the market. ECAs are able to provide financial liquidity in challenging times, making them attractive market participants in all types of credit environments. ECAs are an essential source of capital for the financing of cross-border trade, including for the financing of major infrastructure projects worldwide. In the coming years ECAs will likely continue to play a pivotal role in the financing of global energy, natural resources and infrastructure projects.

Why carbon leakage matters and what can be done against it

Purpose: The main objective of this study was to explore climate finance and its role in climate policy.
 Methodology: The study adopted a desktop research methodology. Desk research refers to secondary data or that which can be collected without fieldwork. Desk research is basically involved in collecting data from existing resources hence it is often considered a low cost technique as compared to field research, as the main cost is involved in executive’s time, telephone charges and directories. Thus, the study relied on already published studies, reports and statistics. This secondary data was easily accessed through the online journals and library.
 Findings: The findings revealed that there exists a contextual and methodological gap relating to climate finance and its role in climate policy. Preliminary empirical review revealed that the importance of continuously assessing and adapting climate finance mechanisms to meet evolving climate policy needs. Climate finance is not merely a financial resource but a crucial tool in the global fight against climate change, and its effective deployment can significantly contribute to achieving the goals set forth in international climate agreements like the Paris Agreement.
 Unique Contribution to Theory, Practice and Policy: The Neoliberal Institutionalism theory, Political Economy theory and the Environmental Governance theory may be used to anchor future studies on climate finance. The study suggested for enhanced transparency and accountability, strengthening capacity building, alignment of climate finance with national priorities, promoting innovative financing mechanisms and facilitating south-south cooperation.

OECD governments provide billions in export credit annually in support of national exporters to developing countries. Linked to the OECD-recommendation on anti-bribery and export credits, the research focuses on whether support of the export credit agencies is dependent on the corruption levels and so called ‘tax haven’ status of the countries to which the exports are destined. We compose a unique panel data set based on data on the export credit agencies of the United Kingdom, the Netherlands and Sweden. We find that corruption levels in the countries to which the exports are destined do not have an influence on the presence and level of export credits. Conversely, whether the destination country of the export is a ‘tax haven’ is important: British and Dutch agencies are significantly more likely to provide export credit for export transactions to tax havens than for non-tax-havens, all else being equal. This declines for the Netherlands over time. The results indicate that the chances that the United Kingdom Export Finance supports transactions with EC to a tax haven are 12 times more likely than for a non-tax haven countries, all else being equal. In the Netherlands, this is 3 times more likely. Based on the findings, we recommend that export credit agencies and their financial backers be extra vigilant in their due diligence policies, especially with respect to ‘tax havens’ and make these policies publicly available.

This research examines the relationship between climate finance, growth in climate investors and growth in climate assets for low emission development. It also evaluates the effect of climate policy evolution on the growth of climate investors and climate assets. Adopting a positivist paradigm, the paper makes use of a quantitative research approach and applies the causal and correlational research design. The paper made use of secondary data from the World Bank Carbon Finance Unit and from the Carbon Disclosure Project (ADP). The major objective was to examine the combined effect of climate finance and climate policy on the growth of carbon investors and carbon assets for the companies in the Carbon Disclosure Project which includes the 100 JSE companies. Findings from the test reveal that the combined effect of growth in climate finance and climate policy evolution has a significant relationship with growth in climate investors and climate assets. Given this result the paper proceeded to examine if the growth in climate finance has any correlation with South Africa’s emission reduction trend. Results however indicate that South Africa’s GHG emission trend does not correlate with climate finance availability; GHG emissions in South Africa have continued to soar despite a seeming growth in climate finance. The paper reasoned that the global climate finance might not be effectively available to corporates in South Africa at the expected level of financing to initiate the expected level of climate investment to effect a significant reduction in greenhouse gas emissions. This confirms literature assertions that global climate finance might not easily be accessible, at least to entities in developing countries. In conclusion, the paper suggests the establishment of a Southern African Climate Finance pool where the public and private sector can contribute and that such pool should be made easily available to carbon investors at a cheap rate with alluring tax incentives to funders and beneficiaries. The paper adds a modest nuance to the literature as no know previous research has dwelt specifically on the unique relationship of climate finance, climate policy and climate investors. The paper’s implication is beneficial to green policy officials and for academic debate. It suggests an avenue for further research about climate investors’ handicap in accessing global climate finance and to explore logistics to develop independent South African based climate finance.

Subject. This article discusses the features and trends in the development of export credit agencies (ECA) in the world in the context of increasing competition of manufacturers for market share. Objectives. The article aims to show the peculiarities of the ECA's activities, reveal new aspects of their operation in modern conditions, and substantiate the need to change the international agreement in the field of export crediting and insurance. Methods. For the study, I used the comparative, statistical, and formal and logical methods. Results. The article shows the key role of ECA as an institution of State support for exports and a guarantor of the stability of the international trading system. It also finds that increased competition from Chinese and other ECAs that are not subject to the Arrangement on Officially Supported Export Credits – OECD rules, as well as the expanded role of ECA during the pandemic, necessitate uniform approaches to State support for exports of domestic producers at the WTO level. Conclusions. ECAs’ support remains one of the effective tools in implementing the State foreign economic policy and increasing the international competitiveness of certain sectors of the economy. The need to improve international rules on export credit and insurance to ensure the stability and sustainable development of international trade is becoming increasingly apparent.

Статья представляет вторую часть исследования о международном опыте в области повышения роли институциональных инвесторов в климатическом финансировании (См.: Вестник Поволжского государственного технологического университета. Сер.: Экономика и управление. 2020. № 4 (48). С. 26-44). На примере Чили представлено современное состояние климатического финансирования в развивающихся странах. Проанализирован процесс формирования государственной климатической политики в России и проблемы стимулирования институциональных инвесторов к более активному участию в климатическом финансировании. Introduction. The United Nations Framework Convention on Climate Change (FCCC) recognizes the vulnerability of all states to the threat of climate change and its consequences, and calls on all states to take measures to mitigate and adapt to climate change. This is particularly relevant for developing countries that do not have sufficient financial resources to independently finance such activities. In resource mobilization, the FCCC adheres to the rule of common but differentiated responsibilities, which means that developing countries can contribute to climate protection according to their real possibilities. Resource mobilization measures are a part of government policy to combat climate change. In this case, institutional investors play a special role. They are able to make a significant contribution to combating climate change and mitigating its consequences with the amount of financial resources they have. Many countries have implemented approaches to regulate the activities of institutional investors and measures to encourage them to become more active in climate finance. Chile's experience shows that it is possible to achieve successful results in the development of regulatory mechanisms to stimulate institutional investors to participate in climate finance in a short time. The goal of the study was to analyze the history and current state of climate finance in developing countries using the example of Chile. Mechanisms for extra-budgetary funds that attracting to finance climate projects were considered. Particular attention is paid to the participation of institutional investors and mechanisms to stimulate their participation in climate finance. Analytical, historical, statistical, systemic-structural and cause-and-effect methods were used in the study. All data were taken from open information sources. Data from specialized organizations dealing with climate finance issues were taken. Results. The institutional structure and financial mechanism for climate finance in Chile were analyzed. The forms of using funds from international donors for the implementation of climate projects were considered. Sources and directions of climate finance as well as public and private initiatives in this area were described. Measures to mobilize institutional investors as well as barriers to expand their participation in climate finance were analyzed. The state and problems of climate finance in Russia were briefly considered and conclusions about possible prospects for its development were formulated. Conclusion. On the example of Chile, the approaches were demonstrated. Due to the approaches, a regulatory framework for mitigating the effects of climate change adapting to its negative consequences and preventing its further changes was created in a relatively short time. Chile has developed and continues to improve strategic documents that allow the institutional investors to form their strategy regarding participation in climate finance. Having no significant budgetary opportunities, Chile skillfully seizes opportunities and builds an ambitious climate protection strategy, and with the assistance of international assistance programs, has become one of the regional leaders in the field of climate finance and sustainable development. Chile's experience deserves to be studied in the formation of the climate policy for the Russian Federation. For today, no climate policy has been formed in Russia and it is not an organic part of the state social and economic policy, and the investment environment is not prepared to attract institutional investors to climate finance. A set of possible measures is proposed to form an investment environment favorable for institutional investors, which will be more effective if there is a clearly formulated state climate policy associated with a long-term strategy of socio-economic development.

A four-pronged approach to climate policy is presented consisting of carbon pricing, subsidies for renewable energies, transformative green investments and climate finance and engendering flywheel effects. Then, a variety of societal and political challenges and obstacles faced by such a climate policy and what can be done to overcome them are discussed. These range from stranded assets, the very long time scales needed to adapt and deal with global warming, intergenerational conflict, international free-rider problems, carbon leakage, green paradoxes, policy failure and capture, adverse income distributional effects and spatial scarcity to the problem of climate deniers and sceptics. The paper also discusses the various tools that are needed for the analysis of both ideal and workable climate policies, and the need to collaborate with complexity scholars, political scientists, sociologists and psychologists.

Energy Supply and Decarbonisation Beyond Brexit: Politics and Policy

South Asia is the most vulnerable region in the context of global warming, climate change, and climate risk. Climate finance is the most useful tool for combating climate challenges worldwide. The study explores the present picture of climate finance in South Asian (SA) countries. The study uses multilateral development bank (MDB), Green Climate Fund (GCF), and Germanwatch supplied data from 2011 to 2021. Under the theoretical lens of institutional capacity development, the study attempts to correlate climate finance and climate risk. The study indicates an increasing trend of MBDs’ and the GCF’s climate finance in many countries worldwide. The study finds that MDBs’ total global climate finance is USD 446,977 million, while the SA region has received USD 59,301 million since 2011. It also reports that MDBs provide 77% and 23% of the money to the mitigation and adaptation areas. Moreover, the study reports that, after COVID-19, MDBs substantially increased the amount of global climate financing, but this increase was not seen in the SA region. Our climate risk data indicate that most of the SA countries are highly long-term climate risky and lose, on average, 0.378% of GDP. The correlation matrix finds a negative and significant correlation between climate finance and long-term and yearly climate risk. The study identifies that the region’s climate financing flow of money is not rationally distributed based on the short-run and long-run climate risks. The study presumes that more climate finance would be the most effective mechanism to mitigate climate risk. Therefore, SA region leadership drastically requires a holistic framework to address the prevailing climate problems and to ensure regional coordination and cooperation toward climate finance and policies. The research findings have significant implications for climate policy and climate finance.

The decision of HMG to cease UKEF support for the fossil fuel energy sector is a signal achievement in global climate finance. It demonstrates the ambition of the UK – post-Brexit, and post-pandemic – to lead international on climate action. In order to deliver on that ambition important practical issues require consideration. First, how can the decision be implemented such as to maximise its credibility and impact, both domestically and internationally? A central issue to implementation is the imperative to avoid the regulatory displacement of finance from UKEF to other UK public finance entities, such as CDC group and PIDG. More ambitiously, if the UK and other similarly situated jurisdictions are to genuinely become a Paris aligned low carbon economy and society, there is a need to understand the role that GGR (greenhouse gas removal technologies) have to play in the process. A complex matter involving climate finance, but also moral hazard and innovation policy, GGR will be a central plank to going beyond ‘do no harm’ and delivering transformation.

The Role of International Development Finance Institutions in Financing Infrastructure in Africa and Its Implications for Korea