In the wake of COP29, a pressing need has emerged to significantly enhance global climate finance flows. Export credit agencies (ECAs) hold immense potential in this regard, yet their current strategies and objectives often fall short of aligning with net-zero goals. This article explores how ECAs can play a pivotal role in channeling capital towards climate action and achieving the ambitious targets set by the international community.

A Strategic Approach to Aligning ECAs with Net-Zero Objectives

The University of Oxford's Smith School of Enterprise and the Environment recently conducted research into export and development finance. The findings revealed that ECAs possess the necessary tools and financial muscle to drive substantial climate finance at scale. These institutions de-risk international trade and investment through various financial instruments such as export credit guarantees, direct loans, political risk insurance, and import guarantees. However, their existing financial commitments remain fragmented and often misaligned with net-zero objectives.

At COP29 in Baku, the international community pledged $300 billion in public finance and set an overarching goal of $1.3 trillion annually to bolster climate finance for developing countries. To bridge this gap, ECAs must take bold, collective actions. By focusing on high-impact instruments like blended finance programs and co-financing mechanisms, ECAs can mobilize a significant portion of the required funds.

About 10 percent of ECAs have joined the UN-convened Net Zero Export Credit Agencies Alliance (NZECA), which offers a structured framework for members to commit to science-based targets and achieve net-zero emissions by 2050. ECA-backed renewable energy financing surged to approximately $24 billion by 2023 from $3 billion in early 2022, but more needs to be done. Challenges include limited membership, voluntary compliance, and tensions between climate commitments and domestic economic priorities.

To address these challenges, ECAs should develop explicit fossil fuel divestment policies, adopt internal carbon pricing mechanisms, and implement stronger disclosure mechanisms. They should also further align with global renewable energy goals by creating new financing instruments and scaling up blended finance programs. Those not yet part of the NZECA alliance should consider joining as full or associate members or attain "observer" status to learn from others.

The NZECA and its members must strengthen their target-setting protocol launched in 2024 by introducing binding compliance mechanisms. A structured observer category should be introduced to allow non-members to engage with NZECA principles before committing fully. With stronger commitments, ECAs can unlock vast private capital, de-risk climate projects, and accelerate financial flows to developing economies.

From a journalist’s perspective, the role of ECAs in scaling climate finance cannot be overstated. Political will and international cooperation are crucial. The NZECA framework provides a viable pathway, but it must move beyond voluntary commitments to enforceable policies. With the right actions, ECAs can become the missing link in delivering on the COP29 commitments and ensuring a just transition for all, even amid geopolitical uncertainties and trade tensions.