Climate campaigners have accused Switzerland’s export credit agency (ECA) of “watering down” its climate commitments, after it scrapped a pledge to end all support for the fossil fuel sector.
Swiss Export Risk Insurance (Serv) was one of numerous public finance institutions that pledged to end direct support for the unabated fossil fuel energy sector by the end of 2022, part of a landmark declaration on climate change agreed at the Cop26 summit in Glasgow.
In a climate policy published in March last year, the ECA confirmed it would “no longer provide direct support to the international energy sector, which remains fully focused on the use of fossil fuels”.
Serv said at the time this restriction would apply to production, exploration, storage, refining and power stations, across oil, gas and coal, as well as to any associated infrastructure and logistics.
But in an updated policy finalised in May this year, Serv has removed that commitment. Support is still unavailable for coal or oil, or for upstream projects, but midstream gas projects are no longer prohibited.
Even if a project does not meet Paris Agreement goals, Serv can still offer insurance if it is deemed in the “economic, foreign, trade and development policy interests of Switzerland”, the policy states.
A Serv press release published in May insists the ECA remains keen to implement the Cop26 pledge.
“However, implementation of the Cop26 statement in the export risk insurance policies of the various OECD members is highly uneven – not least because gas will play a key role as a transitional technology for the foreseeable future,” it says.
“In this context, Serv has revised its guidelines for implementing the declaration.”
When contacted by GTR, a spokesperson for the ECA says: “When assessing a fossil fuel project, Serv not only relies on science… but also takes into account foreign and development policy interests, economic interests and the consideration of the practices of partner countries.”
Gas is frequently cited by the energy industry as a cleaner source of power than coal, and crucial as a transitional fuel while more renewable energy is brought online. ECAs in Italy, Germany and the US are among those to have provided cover for gas projects since signing the Cop26 statement.
But the International Energy Agency has repeatedly called for an immediate halt to all new fossil fuel projects, including gas. Climate experts warn financial institutions that backing gas could cause continued environmental damage, risk an investor backlash and result in exposure to stranded assets.
Serv’s U-turn has drawn fierce criticism from climate research and campaign group Oil Change International.
The group says it is the first time a member of the Clean Energy Transition Partnership (CETP) – a growing list of governments and institutions that have signed the Cop26 agreement – has explicitly weakened its climate policy.
“All other signatories that have altered policies have made them more ambitious,” it says. “According to Oil Change International, many countries are adhering to the agreement, including the UK, France, Canada, Sweden, Finland, Denmark and other major historical fossil fuel financiers.”
Oil Change International adds that Serv has already provided upwards of US$3.5bn in support for fossil fuel projects since joining the CETP.
The largest, signed in January this year, is the provision of US$2.4bn in contract bond insurance for Çalık Enerji Swiss AG, to support a gas power plant project in Turkmenistan.
Other activity includes support for gas projects in Bangladesh, Vietnam and Iraq, as well as an oil and gas heating and power plant in the UK.
As of this month, Oil Change International says, Switzerland is “severely misaligned” with its Cop26 commitments.
Adam McGibbon, public finance strategist at the organisation, says: “No scientific basis was provided for this change, because none exists. There is no time to lose. Switzerland must take urgent action to end this madness – and they will be held accountable to their promises.”
Other countries to have drawn criticism from Oil Change International include Germany, Italy, Japan and the US, though many Cop26 signatories – including Belgium, Canada, Denmark, France, New Zealand, Portugal, Sweden, Spain, and the United Kingdom – remain in line with the agreement.
Update: A spokesperson for Serv refutes figures provided by Oil Change International, saying the ECA’s exposure to the fossil fuel sector is far smaller than the US$3.5bn claimed, as its cover and guarantees only apply to certain parts of the projects identified.
In the case of Turkmenistan, Serv says it provided cover totalling US$293mn rather than the full project value of US$2.4bn, and was acting to support the exporter in the delivery phase rather than the buyer.
The spokesperson reiterates that coal, oil and peat remain off limits for the agency, and that Switzerland “is certainly not at the top of the league in an international comparison… among OECD countries” in terms of fossil fuel support.
This article was amended on July 24 to include an updated response from Serv.
