Sustainable finance

Sector Understanding

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Definition

Sector Understandings are annexes to the OECD Arrangement on Officially Supported Export Credits that set tailored financing rules for particular sectors — ships, aircraft, nuclear power, renewable energy and water projects, and (since 2011) coal-fired power plants. The Climate Change Sector Understanding, revised in 2023, offers more favourable terms for climate-friendly projects, while the coal rules now prohibit support for unabated coal-fired power.

References

www.oecd.orgBulk import source

Source imported for editorial provenance.

www.oecd.orgBulk import source

This reference provides supporting context for how “Sector Understanding” is defined and used.

Overview

How it is used

Export credit agencies apply the relevant sector terms when structuring support; reform of the understandings is a focus of climate diplomacy in export finance.

Why it matters

Sector Understandings show how technical financing annexes can be powerful — if unglamorous — levers for aligning public finance with climate goals.