3. Introduction
In order to limit climate change, countries agreed to the Paris Climate Agreement in 2015, a collective effort to keep global warming well below 2°C and limit it to 1.5°C, and to mitigate the effects of climate change. To achieve this goal, it is important to divert investments away from projects that are harmful to the climate and, at the same time, to stimulate investments in climate mitigation (reducing greenhouse gas emissions) and adaptation (adapting to the effects of climate change). At COP26 in Glasgow, a group of countries, including the Netherlands, agreed on a ‘Statement on International Public Support for the Clean Energy Transition’ (‘CETP’ or also known as the ‘COP26 Declaration’). In doing so, they committed to ending new direct international public support for the unabated fossil fuel sector (by the end of 2022) and to stimulating the energy transition from fossil fuels to sustainable energy, using public support to increase the contribution of the private sector.
The enormous sums required for climate mitigation and adaptation must come from financial resources provided by governments, multilateral institutions, and private parties. Developed countries have also committed to making resources available to developing countries (including in the New Collective Quantified Goal (NCQG) agreed upon during COP29 in Baku in 2024).
For Dutch businesses that respond to and are active in activities that contribute to a low-carbon, resilient economy, there is enormous potential for new business. However, private sector participation lags behind due to factors such as high risks, limited access to financing, and regulatory uncertainties. Governments can intervene by reducing uncertainties and risks for the business community and have various instruments at their disposal to do so. The ECA represents one of these instruments. By insuring significant amounts of international trade and investment, the ECA can enable climate-friendly transactions that would otherwise not have taken place. In this way, the ECA can contribute to a sustainable, cleaner, and more future-proof world.
In recent years, a number of special measures have been introduced to make the ECA more attractive for climate-friendly or green transactions. In addition, exclusions have been formulated with regard to the fossil fuel sector. In this climate briefing, we provide an overview of the measures taken so far and look ahead to the future. The aim is to increase clarity, transparency, reliability, and certainty for users and other stakeholders of the ECA.