Climate Assessment for the UFK-Guarantees

The sufficient availability of raw materials and the securing of access to these raw materials are prerequisites for achieving the climate targets. This applies both in the field of energy generation and in the context of the decarbonisation of downstream industries. For the technological transformation and the transition to a climate-neutral economy, the demand for metals such as lithium, nickel, copper, magnesium, titanium, gallium, germanium, rare earths and iridium is increasing in particular. These raw materials are needed for power generation and transmission, energy storage, and high-performance applications. The extraction of the raw materials themselves is sometimes associated with substantial greenhouse gas emissions.

The climate strategy for the UFK guarantees reconciles the two aspects of improved access to critical raw materials and the lowest possible GHG intensity of their extraction.  This aligns the instrument of UFK guarantees with the 1.5 degree pathway. Projects that make a significant contribution to achieving the climate targets can be supported with improved conditions. This also creates incentives to implement economically and technologically viable measures to reduce greenhouse gas emissions in raw materials projects.

When financing mines that consistently rely on renewable energies for their electricity supply and thus reduce their ecological footprint, lenders can benefit from improved conditions when hedging their risks through UFK-Guarantees:

• Larger volumes: The maximum possible cover volume is increased.
• Lower costs: In the case of UFK guarantees in foreign currency, the fee surcharge is waived.

The World Bank Group's existing standards for the ESHR review already require projects to implement technically and economically feasible measures to reduce greenhouse gas emissions. The climate assessment for UFK guarantees builds on this.

For mining projects in which the construction of a large (>50 MWth) and emission-intensive (>500 gCO₂e/kWh) fossil fuel power plant is planned, technically and economically equivalent alternatives for a lower-emission energy supply are examined. If these are feasible, a possible implementation is discussed together with the project operator. For raw material processing projects, the energy efficiency of the production facilities is assessed. If a large, emission-intensive fossil fuel power plant is built as part of the project, an additional review is carried out in accordance with the Energy Sector Guideline for Export Credit Guarantees.