The Arrangement on officially supported export credits has a special section for climate and water, called the Climate Change Sector Understanding (CCSU).
Since 2005, renewable energy projects and climate adaptation can already be financed on broader terms than the standard Arrangement financing terms. However, the scope of the CCSU was in need of expansion to better support energy transition and technological innovation in climate mitigation. Moreover, the criteria for climate adaptation projects did not appear to work in practice and lacked a clear definition. This prompted the start of international negotiations for the revision of the CCSU in 2020 simultaneously with the negotiations on the modernization of the Arrangement. See also: The revised Arrangement: what will change?.
The revised Arrangement
On July 15, 2023, the revised Arrangement will enter into force and from that date, broader financing conditions will also apply to a wide range of climate-related economic activities. These are:
- Production of renewable energy,
- CO2 storage and use, transmission, distribution and storage of clean energy (incl. battery production and recycling),
- Production of clean hydrogen and ammonia, transmission, distribution and storage of hydrogen,
- Low-emission manufacturing,
- Zero-emission water transport,
- Low-emission road and rail transport as well as enabling infrastructure for these
- The extraction of critical raw materials and minerals on land for the energy transition.
For low-emission water transport and synthetic fuels, a so-called placeholder is included in the Arrangement. Once countries agree on these two activities, the outcome will be added to the July 15, 2023 revised CCSU.
In addition to scope expansion, the more favorable financing terms are also important. These mainly see longer maturities (between 18 and 22 years) and more options for structuring climate finance.
This agreement was reached between Australia, Canada, EU, Japan, Korea, New Zealand, Norway, Switzerland, Turkey, UK and the US.
Contact
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Useful links:
The full text of The Arrangement on the webpage of the OECD: Export credits - OECD.
A FAQ document with questions and answers on the most important changes:
June 2023 - FAQ new Arrangement.pdf (oecd.org)