Swedish export credit agency EKN has launched a green guarantee scheme as part of its effort to meet a government demand to help the energy transition away from fossil fuels.

Eligibility for the guarantee is broad. It applies not only to financing for Swedish exports but also to any financing or working capital for an investment in the “climate transition” made by a local company with “direct or indirect exports”.

The new product can cover loans of up to SKr500mn (US$57.6mn) and as much as 80% of a bank’s risk on financing, instead of the standard 50%.

“In 2020, EKN and SEK [the Swedish Export Credit Corporation] were tasked by the government with investigating how the Swedish export finance system can contribute to the global climate transition,” Karin Wessman, EKN’s head of sustainability, tells GTR.

“One of the action points was to develop this new domestic green guarantee for environmentally friendly projects in Sweden that are linked to Swedish exports.”

EKN will use the EU’s taxonomy for sustainable activities to determine what investments and projects can take advantage of the guarantee.

Wessman says that means investments in replacing emissions-intensive energy such as coal with a lower-emissions fossil fuel such as gas will not benefit from the scheme.

EKN and SEK recently convened a council of policy and climate experts to guide the institutions’ leadership on how to meet the Swedish government’s greenhouse gas emissions reduction target of net zero by 2050. For now, both have opted against a ban on providing cover to the natural gas sector.

The new guarantee “brings great benefits to Swedish companies facing green transition projects in Sweden or aiming to grow in other markets with green products and solutions”, says Anna-Karin Jatko, EKN’s director general.

“The world needs a quick transition and Swedish companies offer world-leading cleantech and innovations for sustainability,” she says in a statement. “The fact that EKN’s guarantees now can be issued to promote climate investments within Sweden is new and an important part of EKN’s contribution to the transition.”

Sweden is the latest of a small handful of European export credit agencies and trade insurers to begin offering some form of green guarantee aimed at stimulating climate-friendly innovation in the export sector.

UK Export Finance began rolling out an Export Development Guarantee (EDG) product earlier this year to help export businesses transition away from coal, oil and gas.

The measure was designed partly to help exporters alarmed by the government’s decision to stop extending export credit insurance to the fossil fuel sector. Wood, an engineering and consultancy firm, was the first customer of the guarantee, covering 80% of a £430mn commercial loan.

Late last year Euler Hermes, the Allianz-owned trade credit insurer, launched a targeted green insurance product, promising to invest the premiums in green bonds.