Is the Netherlands’ export credit insurance support for fossil projects legal?
Today, two independent experts brought out a legal opinion on the obligations of countries and their export credit agencies under international law in relation to export support for fossil fuels. According to the report, emissions by fossil fuels and the related infrastructure need to be reduced urgently.
Many export credit agencies (ECAs) continue to provide billions of euros in government-backed support to fossil projects. This also applies to Dutch ECA Atradius DSB. These projects not only increase emissions of greenhouse gases but also obstruct the transition to a sustainable economy in the Netherlands and elsewhere. This transition is however becoming increasingly urgent, if we are to achieve the goal laid down in the Paris Agreement to keep global warming below 1.5°C.
In the report, commissioned by Oil Change International, the authors analyse the obligations of states, whether acting through official ECAs or in relation to separate ECAs regulated by them, under international law.
The legal opinion was drawn up by lawyer Kate Cook of London-based law firm Matrix Chambers, an expert in international law, climate law and human rights, and professor Jorge E. Viñuales of the University of Cambridge, an expert in international law, climate and energy law, and investment law. In the report, they draw clear conclusions: 'If the extremely dangerous consequences of climate change are to be averted, ... there is no room for additional fossil fuel capacity and existing capacity or its emissions must be reduced urgently and proactively.'
Five clear recommendations
According to the authors, countries must take the following five steps to comply with their international obligations in relation to export credit support and climate change:
a) not to finance new fossil fuel-related projects/activities or increase the financing of existing ones;
b) to decrease existing support within a clear timeframe dictated, first and foremost, by scientific considerations;
c) to proactively avoid 'locking-in' fossil fuel-related projects/activities which may use up a significant part of the remaining carbon budget;
d) to adopt and proactively implement adequate procedures to assess the carbon footprint of any project to be potentially supported;
e) to adopt and proactively implement guidelines concerning the performance of the activities of the relevant ECA in the context of climate change.
Export Finance for Future coalition
Three weeks ago, the Netherlands and a number of other countries launched the Export Finance for Future coalition. The Netherlands wishes to play an active role in the coalition and is organising its next meeting. We see this as an excellent opportunity to ensure that the coalition complies with prevailing obligations under international law to terminate ECA support for the fossil sector.
Together with Oil Change International and Dutch environmental organisation Milieudefensie, Both ENDS has drawn the attention of the Ministries of Finance and Foreign Affairs to the legal opinion.
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