Annexes to COM(2024)556 - - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2024)556 - . |
|---|---|
| document | COM(2024)556 |
| date | November 28, 2024 |
b. Volume of official support:
Annual Activity Reports provide relevant financial information on official support provided by ECAs, in accordance with Member States' respective national legislative frameworks and organisational structure. The Commission has no observations on the financial aspects of the 2023 Annual Activity Reports.
For official support in the form of pure cover, the table below lists reported aggregate nominal risk exposure as of 31 December 2023 for the largest providers in the EU:
| Table 1. Total EU and Member State portfolios of official support in the form of pure cover in 2023 (EUR million) Largest EU contributors according to aggregate nominal risk exposure | |
| Total pure cover exposure in the EU | 372 082 |
| Germany | 99 583 |
| Italy | 81 220 |
| France | 70 327 |
| Sweden | 32 100 |
| Netherlands | 26 856 |
For official financing support, the table below lists the reported nominal value of the officially supported loan portfolio as of 31 December 2023 for the larger providers in the EU:
| Table 2. Total EU and Member State portfolio of official support in the form of official financing support in 2023 (EUR million) Largest EU contributors according to nominal value of officially supported loan portfolio | |
| Total loan portfolio in the EU | 101 388 |
| Italy | 40 840 |
| France | 16 913 |
| Germany | 15 571 |
| Sweden | 9 124 |
| Finland | 7 456 |
It is useful to note that cumulating the figures in Tables 1 and 2 would not give an accurate picture of the total value of support provided to export transaction, since a Member State may support the same export transaction with both direct financing and pure cover. In addition these tables cover all products of ECAs, export credit cover and support financed according to the OECD Arrangement, as well as other export cover and support provided by Member States, including short-term export credits for example.
To represent the flow of official support, the table below only refers to the value of the transactions supported by new commitments of export credit, supported under the Arrangement, during the calendar year 2023, for the larger providers in the EU:
| Table 3. New commitments by EU Member States notified to the OECD over 2023 (EUR million) Largest EU contributors of OECD export credit | ||
| Total number of export credits transactions | Total aggregate credit value of projects supported with export credit | |
| Total new commitments notified in the EU | 1 341 | 31 224 |
| Italy | 277 | 10 092 |
| Germany | 249 | 9 903 |
| Denmark | 32 | 2 890 |
| Sweden | 325 | 2 885 |
| France | 34 | 1 825 |
c. Consideration of climate change objectives:
On 15 March 2022, in conclusions of the Council of the European Union on export credits3, Member States outlined an “EU climate pact for export finance”, which included a number of commitments. Among these, Member States signalled their “willingness to enrich their annual reporting” in the context of this Annual Review “with a climate-oriented review of their respective officially supported export credit activities, sector by sector”. The new version of the checklist template in operation for 2023 sets out the methodology for this and this section makes use of the enriched Member State reporting.
One element is the Council’s commitment, in the same set of conclusions, that Member States would determine by the end of 2023 in their national policies “their own science-based deadlines for ending officially supported export credits to fossil fuel energy sector projects, unless in limited and clearly defined circumstances that are consistent with a 1.5°C warming limit and the goals of the Paris Agreement”. In their Annual Activity Reports, 14 Member States (Austria, Belgium, Denmark, Finland, France, Germany, Italy, Luxembourg, the Netherlands, Romania, Slovakia, Slovenia, Spain and Sweden) reported that they had published such a policy by the 31 December 2023. Czechia, Greece, Poland, and Portugal reported that they were about to do so. The remaining Member States have either stated that they have no interest in the fossil fuel energy sector or do not provide officially supported export credits.
Regarding the coal sector, any support to projects related to unabated coal-fired power plants is prohibited since 2021 under the Arrangement, with exceptions for projects that reduce pollution or install CO2 emissions abatement systems, which lead neither to an extension of the useful lifetime of the plant nor a capacity increase. In their climate-related policies, most of the Member States have put in place a stricter coal phase-out policy than the Arrangement’s ban, including allowing no financing over the whole value chain. In 2023, no transactions for projects related to the coal energy sector (which includes exploration, production, transportation, storage related to distribution infrastructure, refining, distribution and power generation) were reported by European ECAs.
With regard to the oil sector, as of 31 December 2023, the 14 Member States set various timelines for ending support. 10 committed to no longer support these projects after 31 December 2023 (Belgium, Denmark, Finland, France, Germany, Italy, Luxembourg, the Netherlands, Spain and Sweden). The remaining Member States maintained the possibility to finance such transactions, with an end date between now and 2030, although none of these notified oil-related transactions in these sectors in 2023.
In the gas sector, again as of 31 December 2023, the same 10 Member States made clear commitments to stop financing power plant and value chain projects. However, some ECAs (Denmark, Finland, Germany, and the Netherlands) maintain the possibility grant support under limited circumstances, such as abated power generation, the development of the poorest countries or where natural gas is part of a transitional solution, consistent with a 1.5°C pathway. In one case, the Member State’ guideline only covers power generation. The remaining Member States, as for oil, maintain the possibility to finance such transactions, with an end date between now and 2030, although none of these notified gas-related any transactions in these sectors in 2023.
In practice, four export credit-supported transactions in the oil and gas sectors were notified by EU ECAs in 2023, with a total credit value of 1 104 M€:
| Provider Member State | Value of the transaction | Type of project | |
| 1. | Denmark | 45 M€ | A cooking gas storage and bottling facility |
| 2. | Italy | 219.1 M€ | An oil refinery |
| 3. | Germany | 282.6 M€ | A modernisation of a gas-fired power plant |
| 4. | Italy and Netherlands | 364.7 M€ (Italy) + 193.2 M€ (Netherlands) | An upstream oil project |
Regarding the first transaction the Member State reported that support was provided in line with an exception in its policy for “clean cooking”. The ESG assessment concluded that the alternatives would lead to emit more CO2-pollution. Regarding the three remaining transactions, these were issued by three different member states before their climate commitments entered into force. As of 1 January 2024, these three transactions would no longer be permitted. For all transactions, reporting Member States noted that they carried out a similar due diligence process to the one they used for other social and other environmental impacts.
In addition to these restrictions for the fossil fuel energy sector, Member States’ ECAs have adopted incentive programs for climate-friendly transactions, in addition to the longer maximum repayment terms permitted under the Arrangement’s Climate Change Sector Understanding. For example, some ECAs offer more flexible national content rules, like a larger maximal loan amount, a larger cover ratio, a minimum premium rate applied by default or a refund of study expenses for climate-friendly transaction.
In detail, 36 projects have been financed in 2023 in the climate change mitigation and adaptation sectors, as defined in the Climate Change Sector Understanding, by five different countries, for a total amount of 7 256 M€ (almost seven times more of the credit value granted for fossil fuel related projects). Among those projects, most of them were related to renewable energy (31 transactions for a credit value of 6 925 M€).
d. Treatment of other environmental risks:
The OECD Recommendation on Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence sets common principles for undertaking environmental and social due diligence. All EU Member States adhere to the Recommendation, under which they identify and address the potential impacts and risks associated with applications for official support. This recommendation relies on well-established standards such as the International Finance Corporation’s Environmental and Social Performance Standards, the World Bank Group’s Environmental, Health and Safety Guidelines, the World Bank Safeguard Policies and the World Bank Environmental and Social Standards. The Recommendation covers key environmental issues, such as air emissions, including greenhouse gas emissions, resource efficiency, waste management, noise and vibrations, hazardous material management, impacts on ecosystems, protection of biodiversity, and the significant use of natural resources. It also includes requirements for emergency preparedness and response, so that project owners are able to respond to accidents and emergency situations in an appropriate manner to prevent and mitigate environmental impacts.
EU ECAs due diligence policies and risk assessment procedures are primarily based on the Recommendation, even if it plays a non-exclusive role and policies are informed by other standards and the EU acquis. All Member States providing officially supported export credits report compliance with the environmental dimension of the Recommendation, and that it is an integral part of their due diligence and risk management systems and of their decision-making process. Ex ante assessment procedures depend on the type, the size and the category of a given application for officially supported export credit. Risks are identified, classified and evaluated, and may have repercussions on eligibility for support. All EU ECAs confirmed they screened all applications for officially supported export credits with the aim to identify whether an environmental review should be carried out.
Pursuant to the Recommendation, ECAs are required to classify those applications, depending on the potential negative environmental impact, into three risk categories: high (Category A), medium (Category B) or low (Category C). Many Member States report that they apply the Recommendation more broadly than its scope of application. This includes classifying all transactions, including those in which they support a share with a value below SDR 10 million, which would in principle not be captured in the screening phase. Member States report that an Environmental and Social Impact Assessment (ESIA) was carried out in accordance with Article 18 of the Recommendation for all Category A applications for which an ECA made a final commitment. For Category B applications, Member States report that applicants always provided sufficient information on the relevant environmental impacts of the project in accordance with Article 19 of the Recommendation. Before taking a decision to provide support for Category A or B projects, all ECAs that financed such projects reported that they always evaluated the information resulting from the screening and review of the transactions, via a due diligence report carried out either by an internal independent body or an external consultant, whose positive opinion is a requirement for issuance. Relevant information was received through ESIA reports, but also gathered thanks to ECAs’ application forms and questionnaires, desk research, site visits, research carried out by external consultants and direct contacts with the applicants.
Member States did not report situations of permanent non-compliance, though minor non-compliance can occur, such as missed deadlines to submit information or reports. Situations of non-compliance are resolved in coordination with the projects’ sponsors and on occasion with the support of the Member State’s embassy, by designing corrective actions and mitigation measures which are monitored over time, or by suspending support or refusing indemnification, though these latter tools were not used during the reporting period.
e. Social and human rights due diligence:
In addition to its environmental dimension, the OECD Recommendation on Common Approaches has, since 2012, set out principles for undertaking social due diligence. It covers key potential project-related social impacts including on labour and working conditions (e.g. fair treatment, discrimination, freedom of association, collective bargaining, workers’ accommodation), community health, safety and security (e.g. community exposure to disease, use of security personnel), land acquisition and involuntary resettlement (e.g. physical displacement, economic displacement), adequate engagement with affected communities (e.g. informed consultation and participation process, grievance mechanism), indigenous peoples (e.g. free, prior and informed consent process), cultural heritage. It also covers key project-related human rights impacts, including forced labour, child labour, gender issues and life-threatening occupational health and safety situations. Particular attention is paid to vulnerable groups.
The reported due diligence practices of EU ECAs are similar to those for environmental risks. All twenty reporting Member States providing official support indicate compliance with the social and human rights dimension of the OECD Recommendation on Common Approaches, and that it forms an integral part of their decision-making, due diligence, and risk management systems. All confirmed they have screened all applications with the aim to identify whether a social and human rights review should be carried out. They reported that an ESIA was carried out for all Category A applications. For Category B applications, they reported that applicants always provided sufficient information to address the relevant impacts of the project. Before taking a decision to provide official support for Category A or B projects having a potential adverse social and human rights impact, Member States report that their ECAs always evaluated the information resulting from screening and review, similarly as for environmental risks.
Member States did not report situations of permanent non-compliance in 2023 in their social and human rights due diligence processes. One ECA reported having faced situations of deviations from agreed actions and international standards during the monitoring phase of certain transactions and having put in place measures on a case-by-case basis.
All but two EU ECAs have either a participative consultation process or a grievance mechanism for affected communities. In all cases, project sponsors are requested to put mechanisms in place regardless of ECA involvement. The Member States did not report to the Commission any complaint in their Annual Activity Reports for 2023.
f. Anti-bribery measures:
All Member States providing officially supported export credits report compliance with the OECD Recommendation on Bribery and Officially Supported Export Credits. This recommendation contains measures for screening, carrying out due diligence, evaluating and deciding on eligibility for support with the aim of deterring bribery in officially supported export credits. In particular, this means verifying that parties involved in transactions are not listed in the debarment lists of the Multilateral Financial Institutions.
g. Sustainable lending practices:
All Member States providing officially supported export credits report compliance with the OECD Recommendation on Sustainable Lending Practices and Officially Supported Export Credits. The Recommendation seeks to ensure that financing of development needs of lower income countries is mobilised without those countries building-up excessive debt in the future. The adherence to the Recommendation goes hand in hand with a close adherence to the policies of the World Bank and the International Monetary Fund (IMF) on debt limits conditionality for non-concessional borrowing, and as regards sustainable lending. Under the Recommendation, adherents have also agreed to important transparency measures that include information to the World Bank and the IMF. In most cases, debt sustainability assessments are part of overall country risk assessments that affect ECAs country cover policies.
h. Other information contained in the Annual Activity Reports:
Member States report taking care to ensure that ECAs operate as transparently as possible while respecting confidentiality for business sensitive information. Pursuant to the OECD Recommendation on Common Approaches, the harmonised procedure across the EU is public disclosure of detailed information for projects that have potential for adverse environmental or social impacts. ECAs always disclosed all information required pursuant Articles 39 and 41 of the Recommendation, that is to say relevant ex ante information for Category A projects, including ESIAs, and ex post information for all supported Category A and B projects, through dedicated pages on their websites referenced in Annex 2.
Many EU ECAs have a corporate social responsibility policy that typically involves not only internal efforts but also close dialogue with the clients of the ECA. In this context, ECAs are increasingly evaluating their own practices and developing plans to reduce their own environmental impact including estimations of carbon footprint.
4. Compliance of ECAs with Union objectives and obligations:
Article 3 of the Treaty on the European Union (TEU) enumerates the general objectives of the European Union; Article 21 sets out the principles and objectives of the Union’s External Action. According to Article 3 paragraph 5 TEU, in its relations with the wider world the European Union “shall contribute to […] the sustainable development of the Earth, solidarity and mutual respect among peoples, free and fair trade, eradication of poverty and the protection of human rights, in particular the rights of the child, as well as to the strict observance and the development of international law, including respect for the principles of the United Nations Charter”. As regards the EU's common commercial policy, reference to the principles and objectives of the Union's external action is made in Article 206 and in the first paragraph of Article 207 of the Treaty on the Functioning of the European Union.
The European Parliament has called upon the Commission for a statement on whether Member States, when providing officially supported export credits, comply with EU objectives and obligations. The Commission has performed its annual review in accordance with Regulation (EU) No 1233/2011. As such the Commission’s review is based on Annual Activity Reports submitted by Member States and cannot be considered exhaustive.
The Commission considers that the available information provides evidence that officially supported export credits activities in the EU comply with Articles 3 and 21 TEU. The OECD recommendations provide a framework for the management of Member States’ export credit programmes. Member States also establish their own policies based on those recommendations and in line with EU objectives. Member States are also putting in place a range of policies to support the climate transition and reducing support for fossil fuel projects while increasing support for projects that support the transition. The Commission of course supports further progress in this area, including further strengthening of Member States’ commitments regarding the phase-out of fossil fuels. As regards compliance with international obligations and those under EU competition law, there have been no disputes at the World Trade Organisation regarding the export credit activities of an EU Member State for 2023 and the Commission has not received any complaint concerning potential infringements of EU regulation involving EU ECAs.
1 Arrangement on Officially Supported Export Credits
2 Recommendation on Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence; Recommendation on Sustainable Lending Practices and Officially Supported Export Credits; Recommendation on Bribery and Officially Supported Export Credits.
3 15 March 2022 Council conclusions on Export Credits
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