Speech by Executive Vice-President Dombrovskis at the high-level conference 'Net-Zero by 2050: The Role of Export Finance'

Speech at DG Trade export finance conference

Ladies and gentlemen - it is a pleasure being here today.

I am particularly pleased to see so many participants from very different backgrounds.

I know I am preaching to the converted. But just for the record: export credits are a powerful tool. At the end of 2022 the portfolios of EU export credit agencies were worth roughly €350 billion.

For comparison, this is more than half the size of the portfolio of the European Investment Bank.

The European Union is the biggest provider of longer-term export credits under the OECD arrangement. This is why it is all the more important we use export credits strategically and towards the right ends.

In this context, I am particularly pleased to see our ongoing work to support Ukraine. In partnership with the European Investment Fund, financial support under the SME Window of the InvestEU programme will be used to help Member States export credit agencies keep crucial trade flows open with Ukraine.

Moreover, the new Ukraine Facility offers further potential for Team Europe to facilitate investment and trade with Ukraine, including through the option of involving Export Credit Agencies.

This is another important piece of the puzzle to provide the life-saving support to Ukraine.

Ladies and gentlemen

By their very nature, export credits are a dynamic tool. At the EU level, we negotiate the applicable international rules, both in the context of the climate transition and in the context of the increasingly competitive international environment for EU exporters.

The Commission is looking at how to strengthen the EU's tools to confront new challenges in export credit market, and is exploring options for an EU strategy for export credits. This included means to enhance the coordination of external European financial tools, and specifically trade finance and development-related financial flows. We are also exploring the creation of an EU-level export credit facility. On both these points, we have made significant progress.

But perhaps most importantly we also committed to making progress on climate issues. Against this backdrop, I would like to use my intervention today to give you an overview of what the Commission – in close cooperation with Member States – is doing across our various strands of work.

Ladies and gentlemen: climate action is urgent. The International Energy Agency, who you will hear from later today, has emphasised the need for more clean energy in their latest Net-Zero Roadmap.

To keep the objective of a 1.5°C warning limit alive, the installed renewables capacity must be tripled by 2030, while natural gas demand must be reduced by three quarters.

These objectives are challenging, as they imply a broad change in the energy supply all around the world. And it does so at a moment where energy security and the need to increase energy capacity in developing countries are key concerns.

These challenges certainly do not change the science, or the urgency. But they do need to be borne in mind as we work towards a just transition.

Our point of departure is far from ideal. The energy sector (fossil fuels as well as renewables) represents a quarter of the total amount of long term export credit support granted by European export credit agencies. This is an average of €7.3 billion per year. And it needs to change.

Against this backdrop, we want to increase awareness about the urgent need to phase out export credit support for fossil fuel projects and to scale up clean energy.

But here's the good news: together, we are making considerable progress. Within the EU, the Commission was strongly supportive of the EU Climate Pact for Export Finance contained in the Council Conclusions on Export Credits in March 2022. Many Member States have now adopted phase-out policies for fossil fuels on the basis of this.

I will come back to this later and you will also be hearing more about it from other interlocutors today.

I would like to highlight in particular the EU Global Gateway strategy here, which is also a vehicle for export credit agencies to help deliver on the EU's climate objectives. They do so through the financing of projects in green energy, green transport and digital areas in EU partner countries.

At the Commission, we would like to see a greater contribution by export credit agencies to the financing of Global Gateway flagship projects.

This would allow them to contribute to the fulfilment of EU climate goals in an efficient and comprehensive whole-of-government approach, together with the multilateral development banks including the European Investment Bank but also Member States development finance institutions.

To achieve this goal, the Commission established an expert group on enhanced coordination of EU financial tools earlier this year. It focuses on coordinating financial support, including in sectors that bring a significant contribution to climate change mitigation and adaptation in line with the Paris Agreement objectives.

Meanwhile, at the international level, we have also seen significant commitments. Prime examples include the COP26 Statement on International Public Support for the Clean Energy Transition, the Export Finance for Future Coalition and the Net Zero Export Credit Agencies Alliance. These initiatives provide political impetus and transparency to their signatories' efforts to transition.

Beyond these commitments, we have also changed the rules that govern the provision of export credits in the context of the OECD:

o In 2021, driven by the EU, participants of the OECD Arrangement on Officially Supported Export Credits achieved a milestone agreement on the ban of export credit support to unabated coal power generation.

o And in June 2023, participants agreed to expand the scope of the sector's understanding for green and climate friendly projects to new areas such as zero emissions transport and sustainable electricity production and distribution.

This is backed up with stronger incentives via more flexible financial terms and conditions such as a longer permissible maximum repayment term.

All this has led to positive change within the EU: The amount of loans and guarantees granted by European export credit agencies for fossil fuel projects in 2022 was four times less than in 2019, while they gave 75% more support for renewable energy throughout the world.

Public awareness and support have played an important role in this development. And for them, transparency is key. The public and our partners alike must have easy access and a complete picture of where the EU stands.

At the Commission, we are pleased to see that Member States committed under the Climate Pact to provide us with more detailed information on their climate policies. They also agreed to report on the sectors benefitting climate change mitigation, adaptation, as well as in the fossil fuel energy sector.

We have now agreed with Member States on a template for their reporting that will allow us to see the volumes of export transactions supported in the fossil fuel energy sector, as well as transactions supporting climate change adaptation and mitigation efforts.

Based on this information, the Commission will be able to report for the first time these detailed volumes to the public, which we hope to publish by the end of the year.

So far, 15 Member States have published their national plans for phasing out official export finance in the fossil fuel energy sector and they are set to increase project-based transparency on fossil fuel transactions.

I welcome this very much and am looking forward to seeing soon the ambitious national plans, including scaled up clean energy, of those Member States, which are still discussing their policy. Furthermore, we encourage those with longer deadlines for phasing out support to fossil fuels to review their timelines, seeing the urgency.

And last but not least, we encourage Member States to exchange views on their respective plans, on best practices and in particular on how best to implement the commitment to align their policies with the 1.5 degree goal, the Paris Agreement, and the latest scientific evidence in their plans.

I am pleased that during this event, some export credit agencies will present examples of how they have gone about this. In addition, we will continue at the level of joint EU action to push at the OECD for a ban on export finance for projects in the fossil fuel energy sector and for the scaling up of support to clean energy.

In conclusion, I hope my speech has given you an overview of how we are acting – in close cooperation with Member States - across several strands of work to ‘green' our export credit scheme. I am convinced that together, we will be able to make a considerable contribution to achieving our climate goals.

Thank you for your attention and your commitment to this important issue.