Will the Council of the European Union adopt the proposed expansion to climate-focused export credits before 2025?

In 2012, the EU adopted the ‘Climate Change Sector Understanding’ (CCSU). It is a central part of the Arrangement on Officially Supported Export Credits, a set of export credit regulations adopted by 11 countries or blocs (Australia, Canada, the European Union, Japan, Korea, New Zealand, Norway, Switzerland, Turkey, the United Kingdom and the United States). The goal of the CCSU was to focus on providing the “adequate financial terms and conditions to projects in selected sectors identified as significantly contributing to climate change mitigation, including renewable energy, [GHG] emissions’ reduction and high energy efficiency projects, climate change adaptation, as well as water projects’, according to the explanatory memorandum. This was last updated in 2014.

In 2022, the European Commission published a Proposal for a Council Decision, aiming to expand the scope of the CCSU on export credits for climate-related technologies, projects, and products.

The CCSU has the general objective to offer more advantageous financing terms and conditions for climate-friendly projects in third countries than are stipulated in the horizontal rules of the Arrangement, and so incentivise exports of climate-friendly technologies. However, the CCSU was last updated in 2014, and today the coverage of exports that can benefit from […] its rules is too narrow compared to the climate change goals it pursues. In particular, the scope of the CCSU focuses on the sectors of energy generation and transmission. The limited impact resulting from the narrow coverage does not effectively support the Participants’ commitments assumed under the Paris Agreement and the EU ambitions as expressed in its Green Deal agenda. In this context, the Participants have agreed to broaden the scope of the CCSU and have agreed on a number of sectors that should be included in the CCSU, namely:

Storage of electricity, including the manufacture and recycling of batteries.

Zero emissions transport, including enabling infrastructure.

Production of clean hydrogen, transmission, distribution and storage of hydrogen.

Transmission and distribution of low carbon electricity.

Low carbon manufacturing.

The EU’s 2030 Climate Target Plan has been described as ambitious, and its willingness to finance novel climate technologies such as battery manufacturing and hydrogen storage may make the proposed change more likely as it could contribute to achieving these goals.