The significant shift toward renewable energy has compelled public export credit agencies (ECAs) to reassess their financing portfolios.
A comprehensive study recently quantified this transition, shedding light on the movement of export finance from fossil fuels to renewable energy sources over the last decade.
Conducted by researchers across multiple institutions, the analysis leverages transaction-level data covering 921 energy-related projects backed by ECAS across 31 countries between 2013 and 2023, demonstrating the pivotal role these organizations can play in the global energy transition.
Export credit agencies have traditionally supported domestic industries, often through financing fossil fuel projects. The latest findings indicate this trend is changing. The share of renewable energy projects facilitated by ECAS rose markedly—from only about 9% of total energy commitments by these organizations back in 2013 to approximately 42% by 2023. Such growth highlights the effect of international commitments, including those within the E3F climate club, which aims to align export credit practices with climate objectives.
This transition is not only necessary but urgent. The need to reduce greenhouse gas emissions is more pressing than ever, and redirecting financial flows away from fossil fuels toward renewable energy technologies (RETs) has been identified as pivotal. During the analysis period, the study noted fluctuations within energy financing, with notable annual totals peaking at around 43 billion USD, yet demonstrating vast differences between intended investments across technologies.
ECAS historically provided guarantees and direct lending, enabling energy projects worldwide, but the recent data shows these instruments have started favoring renewable technologies significantly compared to conventional fossil fuels. For example, commitments for renewable energy technologies,, such as wind, solar, and grid infrastructure, are on the rise, reflecting broader investment patterns synchronizing with global climate initiatives.
Despite the growth of RET financing, the study also points out persisting challenges. ECAS remain heavily involved with fossil fuel projects, with fluctuations dependent on both technologies and geographical regions. This entrenched support for oil and gas projects raises questions about alignment with climate goals, underscoring the call for substantial reforms within ECA mandates.
Countries within the E3F coalition showcase particularly progressive trends, as their ECAS have increasingly favored renewable energy commitments post-COP26. These member countries aim to shift their financing structures dramatically, aiming for at least 100% support for renewable projects. Yet, the patterns of support differ vastly between high-income and developing countries, sparking concerns over equity and energy access as financing shifts increasingly favor wealthier nations.
The researchers argue for systematic reforms of ECA policies to address these disparities and to escalate support for renewable energy initiatives, particularly for lower-income countries constrained by access to competitive financing. With global emissions and climate commitments at stake, leveraging ECAS to actively promote sustainable energy projects becomes ever more important.
Overall, the study illuminates both the inherent potential and existing hurdles facing export finance as the world shifts toward cleaner energy. The rising share of renewable projects marks progress, yet the call for urgent reforms indicates there is still much work to be done to align public export finance with the principles of sustainability and the global climate agenda.
The study emphasizes the necessity of continuing dialogue and international cooperation relating to climate financing, as ECAS play increasingly influential roles on the world stage. Future policies should not only focus on enhancing support for RETs but also exploring methods to facilitate sustainable transitions for all countries, regardless of income level, to secure equitable progress in the fight against climate change.