Export Credit Agencies: Fossil Fuel Exclusion Policies, Paris Alignment, and Role as Transformational Actors

Abstract

The decision of HMG to cease UKEF support for the fossil fuel energy sector is a signal achievement in global climate finance. It demonstrates the ambition of the UK – post-Brexit, and post-pandemic – to lead international on climate action. In order to deliver on that ambition important practical issues require consideration. First, how can the decision be implemented such as to maximise its credibility and impact, both domestically and internationally? A central issue to implementation is the imperative to avoid the regulatory displacement of finance from UKEF to other UK public finance entities, such as CDC group and PIDG. More ambitiously, if the UK and other similarly situated jurisdictions are to genuinely become a Paris aligned low carbon economy and society, there is a need to understand the role that GGR (greenhouse gas removal technologies) have to play in the process. A complex matter involving climate finance, but also moral hazard and innovation policy, GGR will be a central plank to going beyond ‘do no harm’ and delivering transformation.

Keywords: Climate finance, UKEF, export credit agencies, net zero, GGR, greenhouse gas removal technologies, COP26, Paris Alignment, regulatory displacement.