OECD countries have agreed new rules to strengthen current environmental and social due diligence processes when providing export credits and to create financially prudent incentives to support business projects with low CO2 emissions. The second agreement also aims to encourage support for advanced climate-friendly technologies such as carbon capture and storage.
The first agreement is an OECD Recommendation that broadens and enhances the provisions for addressing environmental and social issues relating to the export of capital goods and services qualifying for official export credits. This agreement updates and improves a 2007 Recommendation.
The new Recommendation provides clarity to existing disciplines and aims to promote international coherence. It reflects recent developments in the fields of environmental, social and governance due diligence, such as measuring greenhouse gas emissions and addressing project-related human rights impacts, in reviews of environmentally and socially sensitive projects.
The agreement results from extensive negotiations by the Working Party on Export Credits and Credit Guarantees (ECG) and consultations with relevant stakeholders, such as non governmental organisations, business and banking groups, labour unions, and other international organisations. The UN Secretary General’s Special Representative on business and human rights, Prof. John Ruggie, also provided input.
The second agreement, which has been approved by the participant countries to the Arrangement on Officially Supported Export Credits, creates a framework and incentives for the financing of large, capital intensive projects in sectors that help mitigate climate change, including renewable energies and water projects.
Participating countries may now support export projects that can support credits with up to a 15 or 18 years repayment term, and use flexible repayment structures for long-lived projects. In addition to financing for renewable energy projects with 18 years repayment, which has been in place for the previous three years, several advanced technologies are now eligible for longer-term financing when projects warrant them, including carbon capture and storage, fossil fuel substitution projects (waste to energy projects, hybrid power plants) and projects that promote energy efficiency.
The terms and conditions for each project will have to meet several environmental standards and be financially justifiable. This agreement will be reviewed regularly to ensure that future technologies will be included within the scope of the Sector Understanding on Export Credits.
The full texts of the Recommendation of the Council on Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence (the “Common Approaches”) and of the Sector Understanding on Export Credits for Climate Change Mitigation, Renewable Energies and Water Projects (the “CCSU”) are available on the OECD website.
For further information, journalists are invited to contact Steven Tvardek in the OECD Trade and Agriculture Directorate (tel.  (0)1 45 24 89 10).
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