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Press Release

Belgian export credit agency restricts oil and gas finance to meet climate commitment, but leaves gas loopholes 

Credendo’s new policy is meant to implement the Glasgow commitment to end international public finance for fossil fuels by the end of 2022, but it leaves loopholes for existing oil and gas fields and gas-fired power.

FOR IMMEDIATE RELEASE

Contact:
Laurie van der Burg, laurie[at]priceofoil.org

Belgian export credit agency restricts oil and gas finance to meet climate commitment, but leaves gas loopholes 
BRUSSELS – Today the Belgian export credit agency (ECA), Credendo, published a new policy to shift public finance out of fossil fuels and into clean energy. The policy is meant to implement a commitment that Belgium made alongside 33 other countries and 5 institutions at the United Nations climate conference in Glasgow last year. The group promised to end international public finance for fossil fuels by the end of 2022 and shift this money to clean energy. Though today’s new policy imposes additional restrictions on fossil fuel financing, it leaves loopholes for Credendo to continue financing new fossil fuel projects.

According to the International Energy Agency, to maintain a 50% chance of limiting global heating to 1.5°C there can be no investments in new coal, oil or gas fields or Liquefied Natural Gas (LNG) infrastructure without stranded assets. Other research shows that on top of ending investments in new fossil fuel supply, 40% of already developed oil and gas reserves need to be left unextracted. 

Regardless, governments worldwide still invest significant sums of public money in new fossil fuel projects. The ECAs of the G20 countries provide USD 40 billion in government-backed finance to fossil fuel projects a year, 11 times their support for clean energy (USD 3.5 billion a year). Credendo is no exception. Over the last five years it provided USD 3.4 billion in direct export credit support and another USD 3.4 billion in indirect support to fossil fuel projects. This compares to a meager EUR 847 million in support for renewable energy projects.

The new policy puts a complete halt to financing for new and already developed coal mines and to financing for new oil and gas fields from 1 January 2023. It also puts an end to financing for oil-fired power unless installations are equipped with carbon capture, usage and storage (CCUS) technology. However, the policy still allows financing for existing oil and gas fields approved before 2022 and, up until 2025, it allows investments in gas-fired power plants. Any such investments need to meet a number of criteria that – if applied with integrity – will be virtually impossible to meet for new fossil fuel projects. Projects must be compatible with the 1.5°C warming limit, and must promote, or at the very least not delay, the transition to clean energy for the country concerned. Given 40% of already developed fields need to be left unextracted for 1.5°C, further expansion of production from existing fields is not 1.5°C compatible unless more than 40% of already developed fields are shut down. As the committed emissions from existing energy infrastructure jeopardize the 1.5°C target, continued financing for new gas-fired power plants up until 2025 is also not 1.5°C compatible. Alternatives to gas-fired power exist that do not come with stranded assets or financial risks linked to volatile gas prices. Clean energy alternatives, such as solar and wind energy combined with energy storage, are already cheaper than gas-fired power. 

Research published by the International Institute for Sustainable Development (IISD), Oil Change International (OCI) and Tearfund shows that, with six months left until the end of 2022 deadline, most signatories of the Glasgow commitment still need to publish updated or new policies that match their promise to shift public finance out of fossil fuels and into clean energy. However, the report also shows that Credendo’s new policy does not live up to the policies of Denmark and the United Kingdom nor those of the French and Swedish development finance institutions, AFD and Swedfund. These do not allow for investments in any oil and gas production, and either fully exclude gas-fired power from financing or apply additional criteria such as an alternatives assessment. To live up to the Glasgow commitment, Credendo’s policy should be strengthened to match these best practices.

In reaction to Credendo’s policy, expert Laurie van der Burg at Oil Change International, issued the following statement:
“Today’s policy is a step forward for Credendo, but the extent to which it delivers on Belgium’s promise to stop funding fossil fuel projects completely hinges on its implementation and there are reasons for concern. The policy leaves room for investments in existing oil and gas fields as well as gas-fired power, but the science tells us that such projects will not meet the requirement for these projects to be compatible with the 1.5C global heating limit.”

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Notes:

  • Credendo is Belgium’s official and state-backed export credit agency. Its mission is to support Belgium corporations in their international operations. Today it published its energy transition policy.
  • The Glasgow Statement was launched at the 26th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP 26) in Glasgow. Signatories aim to “end new direct public support for the international unabated fossil fuel energy sector by the end of 2022” and instead “prioritise our support fully towards the clean energy transition.” 
  • It was signed by 34 governments and five public finance institutions, including Agence Française de Développement (AFD), Albania, Banco de Desenvolvimento de Minas Gerais (BDMG), Belgium, Burkina Faso, Canada, Costa Rica, Denmark, the East African Development Bank (EADB), El Salvador, Ethiopia, the European Investment Bank (EIB), Fiji, Financierings-Maatschappij voor Ontwikkelingslanden N.V. (FMO), Finland, France, Gabon, The Gambia, Germany, The Holy See (Vatican City State), Iceland, Italy, Jordan, Mali, Marshall Islands, Moldova, the Netherlands, New Zealand, Portugal, Republic of Ireland, Slovenia, Spain, South Sudan, Sri Lanka, Sweden, Switzerland, the United Kingdom, the United States, and Zambia. The Holy See is not included in the high-income country analysis for this report. 
  • The recently published report “Turning Pledges into Action” from IISD, OCI and Tearfund shows that Credendo’s has particularly limited transparency compared to that of other ECAs. Reporting on its energy finance is very limited and authors were not able to obtain further data through email inquiries. Many other ECAs — including SERV, UKEF, EDC, and US EXIM have a project database or transaction list that is updated regularly. Credendo does not have this.
  • At the G7 Environment, Climate, and Energy Ministers meeting in May 2022, G7 members adopted a near-identical commitment. This means that in addition to the other G7 members, Japan has now also committed to ending direct international public finance to unabated fossil fuels by the end of 2022.