18/11/2015 - Participants to the Arrangement on Officially Supported Export Credits have agreed new rules on official support for coal-fired power plants, including restrictions on official export credits for the least efficient coal-fired power plants, the OECD announced today.
“After two years of intense negotiations, the agreement represents a first important step towards aligning export credit policies with climate change objectives to achieve lower emissions,” says Pekka Karkovirta, vice president for international relations in Finland’s export credit agency Finnvera and Chairman of the Participants to the Arrangement.
The new agreement negotiated at the OECD encourages both exporters and buyers of coal-fired power plants to move away from low-efficiency towards high-efficiency technologies. The agreement removes support for large super and sub-critical coal-fired power plants, while allowing support for smaller sub-critical plants in poorer, developing countries. It also allows support for up to medium-size super-critical plants in countries facing energy poverty challenges. Restrictions on support will not apply to any plants equipped with operational carbon capture and storage, as provided under the existing climate sector understanding.
The agreement contains a mandatory, built-in review process that will allow further revisions of the rules based on reports issued on climate science and on advancement in electricity generation technologies, as well as the development of domestic policy frameworks in both exporting and importing countries.
This agreement is subject to the completion of the European Union internal decision making process.
The Participants to the Arrangement call upon other export credit providers to consider this new agreement as a reference in their export credit policies.
The OECD export credit committees have been reviewing since November 2013 export credit rules for coal-fired power plants. A May 2014 Ministerial Statement on Climate Change affirmed the Members’ resolve to “continuing discussions on how export credits can contribute to our common goal to address climate change,” with the aim of agreeing, prior to COP 21, a set of measures for export credits that might encourage and support climate friendly exports, including best available technologies.
“These new rules will substantially limit official export credit support for new coal-fired power plants, and mark a major contribution to international efforts to combat climate change,” said David Drysdale, head of the export credit division in the OECD’s trade and agriculture directorate. Over two-thirds of the coal-fired power projects receiving official export credit support from Participants between 2003 and 2013 would not have been eligible for such support under the new rules.
The new rules distinguish between:
The new rules will take effect from 1 January 2017, and are subject to a mandatory review starting in 2019, with the goal of strengthening them.
The OECD is the key multilateral negotiating forum where international disciplines on officially supported export credits are agreed and implemented. It enables governments, which are both partners and competitors, to co-operate in developing and implementing various financial and good governance disciplines, thereby establishing a level playing field for exporters while eliminating financing subsidies. The OECD also facilitates transparency and sharing of official information on export credit policies and practices among export credit agencies (ECAs) and governments.
The Participants to the Arrangement on Officially Supported Export Credits are: Australia, Canada, the European Union, Korea, Japan, New Zealand, Norway, the United States and Switzerland.
For more information, please contact the OECD Media Office (+33 1 45224 9700).
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