Export finance and the energy transition: Lessons from the OECD and China on phasing out fossil fuel support

Abstract

Export credit agencies (ECAs) are public finance institutions (PFIs) that are pivotal for accelerating the clean energy transition yet remain under-researched. Historically, ECAs aligned with strategic foreign policy priorities of their home countries, while rarely including climate mandates. Drawing on comparative analysis of ECAs from the Organisation for Economic Co-operation and Development (OECD) and China, this paper identifies similarities and differences in their approaches to phasing out fossil fuel support and derives the best practices in aligning export finance with the Paris Agreement. Overall, we find that: (a) ECA energy finance continues to lack transparency with the notable exception of energy finance reporting by countries in the Export Finance for Future (E3F) coalition; (b) ECA ‘climate clubs’, such as E3F, have catalysed momentum to phase out fossil fuel support but lack enforcement mechanisms; (c) while Chinese ECAs started ‘greening’ their export finance faster than some OECD ECAs, they still lag behind their E3F peers that are leading the transition away from fossil fuels; (d) clean energy finance remains under-supported by almost all ECAs, especially to Global South countries. We recommend that both Chinese and OECD ECAs introduce and expand finance instruments for clean energy exports and fully phase out fossil fuel support. This may require updating their mandates and policies but will allow ECAs to evolve from passive facilitators of export competitiveness to active enablers of the global energy transition.