The Federal Ministry of Economics and Climate Protection (BMWK) today presented the "Climate Policy Sector Guidelines for Export Credit and Investment Guarantees" on the occasion of the Foreign Trade Days currently taking place at the BMWK.
This will provide even better support for climate-friendly technologies.
Federal Minister Habeck commented: "We want to strengthen the resilience and competitiveness of the German economy, because the markets of the future will be climate-neutral. Here, the German economy should be able to operate successfully with medium-sized and large companies. With the new guidelines, we are focusing foreign trade promotion more strongly on climate-friendly technologies, supporting their development and promoting the export of green technologies abroad. In this way, we are also strengthening new markets and thus the resilience of our economy."
Details on the guidelines:
- What are the sector guidelines about?
The sector guidelines contain decision-making criteria for the underwriting of these export credits and investment guarantees (including "Hermes Cover") and, in doing so, apply a climate policy benchmark for the first time. The sector guidelines were developed for three sectors: Energy, Industry, and Transportation.
The export credit and investment guarantees are important components of German foreign trade promotion. The export credit guarantees protect exporters and banks against economically and politically induced payment defaults. The investment guarantees protect German investors in foreign investments against political risks such as expropriation, war and capital transfer restrictions. The federal government's guarantee instruments make it possible to obtain more favorable financing terms and also to provide political support in the event that business does not go smoothly.
The sector guidelines are part of the climate strategy for foreign trade promotion pursued by the BMWK. This implements the goal of the coalition agreement to also align foreign trade promotion with the Paris global climate agreement, as the German government had also pledged to do in 2021 at the global climate conference in Glasgow.
- What changes and for how many projects?
The aim of these new guidelines for decisions on guarantees is to stimulate innovation and climate-friendly technologies, to support their development and to promote the export of green technologies abroad. At the same time, the financing of climate-damaging activities is to be ended in perspective.
This will strengthen the competitiveness of the German economy, as industrial product markets will be climate-neutral in the future. Here, the German economy should be able to operate successfully with medium-sized and large companies. More climate protection in foreign trade promotion is a contribution to future viability and resilience and thus also to greater economic security. This not only benefits German foreign trade, but we also use foreign trade promotion instruments to support the transformation to climate neutrality in the target countries.
The new climate policy sector guidelines will promote and intensify exports of green technologies in the energy (climate-friendly energy as well as fossil fuel extraction, processing, transport, storage and power generation), industry (chemicals and metals) and transport (civil aviation and shipping) sectors by better cover conditions.
The sector guidelines define three categories in this context: a green category for particularly eligible (green) technologies. These will receive easier and more attractive cover conditions in the future. For products that fall into the white category (e.g., exports of machinery and equipment that do not make a significant contribution to the Paris climate goals), the conditions remain unchanged. Products in the red category are excluded from cover, meaning that exports can no longer be covered by export credit guarantees.
The green category includes exports and investments in wind energy, hydropower, photovoltaics, battery cell production and hydrogen, for example.
17% of ECG-covered transactions from the past 18 months would have been specifically supported in the green category.
Export deals in the white category would continue to be eligible for cover under the previous terms and conditions. This would have been 79% of the deals from the last 18 months.
In the consultation, the federal government has consistently pointed out that all sectors must follow the decarbonization path and that government cover options now only exist along this path.
Only for the red category will coverage exclusions be implemented. These are the deals that are not compatible with the 1.5-degree path. In the last 18 months, five transactions would have been affected here (this is only 3% of the covered transactions). All of these are fossil fuel projects.
For deals in the green category, one of the plans is to increase the cover ratio for economic and political risks from 95% to 98% - making financing easier. It is also to be permitted that the permissible share of foreign value added in the exported product is up to 70%. The prerequisite, however, is that core competencies and key technologies continue to come from Germany.
- in more detail
What will change in the energy sector?
In the energy sector, the sector guidelines set clear rules for the phase-out of fossil fuels. This is an important signal for the alignment of our foreign trade promotion policy with climate targets. There are narrowly defined exceptions under which an export credit guarantee can still be granted.
These exceptions relate primarily to the gas sector. Accordingly, cover for gas production projects can only be assumed if safeguarding national security (e.g., to avert a serious impairment of supply security) or a geostrategic supply security interest (e.g., to avert a food crisis) so requires. It is also important that the implementation of the project complies with the 1.5 degree target. Lock-in effects must be avoided.
This part of the BMWK climate strategy implements international commitments such as the Glasgow Statement and is consistent with our multilateral commitments, such as those made at the G7 summits in Elmau and Hiroshima.
What will change in the industry and transport sectors?
With regard to climate impacts, export credit guarantees will be based on the EU taxonomy regulation in the industrial sector for iron-steel and aluminum production in terms of positive incentives.
In the production of chemicals, the requirements of the EU Taxonomy Regulation are applied, e.g. by granting more favorable cover conditions to export transactions involving plants with particularly low lifecycle missions.
In the transport sector, international emissions targets are being implemented in civil shipping; in this area as well as in civil aviation, support is being provided in particular for conversion to climate-friendly forms of propulsion.