February 14, 2000

NGO Recommendations Regarding Climate Change Issues
for the OECD Working Party on Export Credits and 
Credit Guarantee

Dear Ms. Nygren,

As the OECD Export Credit Working Party prepares to meet on February 24-25, 2000, we write to provide input on the G-8 mandate to work towards and complete by 2001 common environmental guidelines, and on the OECD Ministers' mandate to strengthen common approaches concerning the environment. Our comments pertain particularly to the growing impact that export credit agencies have on global climate change via their support of projects that will release greenhouse gas emissions.

As a preliminary matter, we support the recommendations that have been made by NGOs from around the world to develop common environmental guidelines and standards and strongly endorse the October 26, 1999, submission by some 64 NGOs from 23 countries to the working party on this topic. Given the urgency of the climate change issue, and its potentially devastating impacts on the global economy and environment, we urge you to consider these additional comments in your upcoming meeting of the ECG.  We believe that the adoption of these recommendations would increase public transparency surrounding greenhouse gas emissions, and also enable ECAs to play a positive role in solving a global problem within the context of their missions by proactively shifting towards export support for sustainable, renewable energy.   

1.         Public Reporting of Greenhouse Gas Emissions

Reporting greenhouse gas emissions enables an export credit agency to publicly analyze its portfolio’s impact on global climate change and to seek emissions reductions on a project by project basis. It would also assist developing/buyer countries in their greenhouse gas reporting obligations under the Framework Convention on Climate Change. Such a calculation process would enable ECAs to improve their overall portfolio and play a meaningful role in support of cleaner development in developing countries.

Research conducted by various U.S.-based organizations reveals that export finance agencies are significantly contributing to greenhouse gas emissions to the global commons. A 1999 study by the Institute for Policy Studies and Friends of the Earth regarding the U.S. Export-Import Bank demonstrated this agency’s significant role. Additionally, a forthcoming study by the World Resources Institute indicates that fully two-thirds of ECA financing, guarantees and insurance from OECD countries is concentrated in energy- and carbon-intensive sectors.  Thus, the cumulative impact of ECA support for fossil fuels is very likely immense.  However given the lack of transparency within ECA portfolios, it is impossible to determine the full climate change impact supported by your members.

However, there has been some positive reform in recent years on this issue.  In 1997, the U.S. Export-Import Bank and the U.S. Overseas Private Investment Corporation began to calculate greenhouse gas emissions on a very limited basis at the behest of President Clinton. In 1997, World Bank President James Wolfensohn issued the following public statement on climate change:  “The World Bank will routinely calculate the potential impact of all its energy projects on climate change, and where there is cause for concern,…assist developing country clients to finance more climate-friendly options.” 

These initial pledges of reform on climate-related issues were followed by the May 1998 G-8 Summit final communiqué which stated:  “We must ensure that the policies and operations of the World Bank and other International Financial Institutions take full account of climate change.”

Therefore our first recommendation is the following:

The Export Credit Working Party should develop, as part of the common environmental guidelines and action to reduce greenhouse gas emissions called for under the 1999 Cologne G-8 communiqué and in accordance with the full greenhouse gas emissions accounting called for under the 1998 Birmingham G-8 communiqué, full transparency with regard to greenhouse gas emissions.  Full accounting should include, but not be limited to, an accounting for all fossil fueled power, oil, gas, or coal development, transportation projects, and the most energy-intensive manufacturing (chemicals, steel, cement) supported by ECAs.

2.        Better Financing Terms for Sustainable Renewable Energy Exports

Our organizations strongly support the increased export of clean, sustainable, renewable energy systems including wind, solar, biomass and geothermal systems, provided this technology meets the development goals and aspirations of locally affected communities. We believe that preparing now for increased funding of sustainable renewables and energy efficiency will provide proactive, forward-thinking export credit agencies with a significant competitive advantage over foreign counterparts in the global marketplace. More focus on sustainable renewable energy sources and energy efficiency will help stimulate business for domestic companies as developing country partners see the growing value of environmentally beneficial technology.

It is time for proactive movement on these issues within the OECD.  We note that the World Bank has in 1999 begun targeted shifts towards clean renewables and its private sector arm, the International Finance Corporation, has created the Renewable Energy Efficiency Fund and is involved in the Solar Development Corporation. 

Therefore our second recommendation is the following:

The Export Credit Working Party should develop, as part of the common environmental guidelines called for under the 1999 G-8 communiqué and in accordance with the need for full accounting of climate change impacts called for under the 1998 G-8 communiqué, more favorable terms to encourage broader support for projects within ECA portfolios that are environmentally beneficial and have a positive impact on climate (such as small scale-hydro (i.e., less than 20 MW), biomass, geothermal, wind, solar, energy service companies and cogeneration). Favorable terms should include: 1) agreeing to rules that allow for market assistance funds within a project transaction (e.g. foundation grants, global environment facility, etc.) and 2) increased length of repayment terms for sustainable renewable energy.  Here it should be noted that nuclear power already receives an exemption for length of repayment terms compared to most ECA transactions, so sustainable renewable energy sources should be given equal if not better terms under the OECD agreements negotiated by the Export Credit Working Party.

In relation to this request we also call on the Working Party to phase out support for nuclear energy and large dams that disrupt natural ecosystems and the livelihoods of local inhabitants.

Thank you for your time and consideration.  We would appreciate discussion of these issues at your upcoming meeting and look forward to positive outcomes.

Signed,

Argentina

Roque Pedace, Friends of the Earth, Argentina

Australia

James Arvanitakis, AIDWatch

Belgium

Liam Salter, World Wildlife Fund European Policy Office

Bolivia

Jose Martinez, CPTI - CIDOB

Brazil

Beto Ricardo, Instituto Socioambiental

Cameroon

Koueda Koung Jean, Global Village Cameroon

Canada

Elizabeth May, Sierra Club, Canada

Pamela Foster, Halifax Initiative, on behalf of:

Canadian Council for International Cooperation (100+ international Development and Environment NGOs)

Canadian Friends of Burma

Canadian Labour Congress

Canadian Lawyers Association for International Human Rights

Canadian Autoworkers Social Justice Fund

Democracy Watch

East Timor Alert Network

International Centre for Human Rights and Democratic Development

MiningWatch Canada

Project Ploughshares

RESULTS Canada

Social Justice Committee of Montreal

West Coast Environmental Law Association

Colombia

Censat Agua Viva (Friends of the Earth-Colombia)

Finland

Tove Selin, Energypolitical Association - Alternative to Nuclear Power

Johanna Kojola, Finnish Association for Nature Conservation

France

Ben Lefetey, Amis de la Terre (Friends of the Earth-France)

Helene Connor, Helio International

Germany

Heffa Schuecking, Urgewald

Barbara Unmüssig, WEED

Regine Günther, World Wide Fund for Nature

Iceland

Arni Finnsson, Iceland Nature Conservation Associaiton.

India

M.C. Mehta, Indian Center for Environmental and Legal Action

Leo Saldanha, Environment Support Group

Italy

Francesco Martone, Centro Internazionale Crocevia

Aldo Iacomelli, Greenpeace Italy

Japan

Yuri Onodera, Takahiro Okazaki, Friends of the Earth Japan

New Zealand

Barry Weeber, Royal Forest and Bird Protection Society

Stephen Blyth, Environment and Conservation Organisations of New Zealand

L.A. Carter, The Lusaka Agreement Task Force

Russia

Alexandr Nikitin, Environmental Rights Center

South Africa

Richard Worthington, Earthlife Africa Johannesburg

South Korea

Ms. Kim, Choony, Mr. Choi, Yul

Korean Federation for Environmental Movement

Switzerland

Peter Niggli, Swiss Coalition of Development Organizations

Thailand

Margie Law, Towards Ecological Recovery and Regional Alliance

The Netherlands

Ophelia Cowell, Transnational Institute Energy Project

Bill Hare, Greenpeace International

Johan Frijns, Friends of the Earth International

Per de Rijk, WISE International

UK

Dr Frances MacGuire, Friends of the Earth-UK (England, Wales and Northern Ireland)

USA

Daphne Wysham, Institute for Policy Studies

Jon Sohn, Friends of the Earth-USA

Terri Swearingen, Tri-State Environmental Council

Hal Kane, Pacific Environment Resource Center

Howard Geller, American Council for an Energy Efficient Economy

Julia Philpott, International Institute for Energy Conservation

Claudia Saladin, Center for International Environmental Law

Bruce Rich, Environmental Defense

Atossa Soltani, Amazon Watch

Bonizella Biagini, National Environmental Trust

Carol Werner, Environmental and Energy Study Institute

cc:  Members of the Working Party on Export Credits and Credit Guarantees

       Mr. Jean-Marie METZGER, Director, Trade Directorate, OECD

       Mr. Steve CUTTS, Principal Administrator, Export Credits Division, Trade Directorate, OECD

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