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For Immediate Release

Contact

Nicole Rodel – nicole [at] priceofoil.org

Press Release

122 CSOs warn there is only six months left to meet joint COP26 commitment to end international public finance for fossil fuels

Russia’s war in Ukraine and fuel price spikes mean international public finance institutions must roll out rapid decarbonization and aid packages, not back track by locking in new fossil infrastructure
WASHINGTON -

Today, 122 civil society groups are releasing letters to eleven government signatories to the Glasgow Statement on International Public Support for the Clean Energy Transition, laying out the actions they must take as soon as possible to meet their commitment. In this joint statement at COP26, 35 countries and 5 public finance institutions committed to end their international public finance for ‘unabated’ fossil fuels by the end of 2022, and instead prioritise their “support fully towards the clean energy transition.”

The Glasgow Statement has the potential to directly shift at least USD $24 billion a year in influential trade and development finance from governments away from oil, gas, and coal towards the clean energy transition if it is implemented well — and much more if these initial signatories can convince peers to join them and bring their commitment into other multilateral settings like the G7 and OECD.

However, todays’ letters to Canada, Germany, Netherlands, Italy, France, Portugal, and New Zealand warn that the initiative will fail to have this transformative impact if initial implementation is late, creates large loopholes for gas or carbon capture, utilisation and storage (CCUS), or is not paired with an exponential increase in public finance for renewable energy. Letters with similar recommendations have already been sent to the United Kingdom and United States, and will be sent this month to Costa Rica and El Salvador.

The warning from civil society comes at the halfway mark for countries to implement their commitment, and right ahead of the G7 where public finance for energy is set to be a key issue. As Russia’s war in Ukraine has continued, the United States and Canada have signalled they may backtrack and instead rely on significant loopholes to continue trade finance for fossil gas.

Last month’s IPCC Working Group III report was clear that continued fossil fuel finance of any kind is misaligned with the Paris climate goals, and that public finance for fossil fuels in particular plays a key role in determining our global future energy systems. In light of this, civil society groups are also emphasizing the need for wealthy country signatories to prioritize public finance for a just energy transition for low-income countries and communities and to avoid hypocrisy by ending any public finance and other subsidies for fossil fuels they still provide domestically. The letters to Costa Rica and El Salvador also emphasize the role Global South country signatories can play in holding wealthier signatories accountable to these responsibilities.

Quotes:

Bronwen Tucker, Public Finance Campaign Co-Manager, Oil Change International said: “The Glasgow Statement on public finance was a truly exciting break from most multilateral climate agreements because it named both a near-term timeline and concrete actions that signatories would take. But now that we are at the halfway point to implementation, too many signatories are missing vital ingredients for what will be needed for it to have a transformative impact: binding fossil fuel exclusion policies that include gas, clear definitions for CCUS, and meaningful increases in support for a globally just energy transition.”

Julia Levin, National Climate Program Manager, Environmental Defence Canada said: “As the largest provider of public finance to oil and gas companies in the G20, Canada’s commitments to end subsidies to the sector are critical. But so far, Canada has been dragging its feet on this key climate promise – and has instead created new subsidy and bond programs geared toward false solutions like carbon capture. Oil and gas companies have profited immensely for decades from activities that are fueling the climate crisis and polluting communities’ land and water. Public financing should not keep getting funneled to these companies period, no matter where in the world they operate or whether they are promising to lower their emissions.”

Diana Cárdenas Monar, General Coordinator, Climate Finance Group for Latin America and the Caribbean (GFLAC) said: “In line with Article 2.1c of the Paris Agreement and the need for financial flows to become a driver of the climate agenda and the energy transition, the Glasgow Statement on public finance was an important step forward. But what is needed is to go beyond words into action, with a sense of urgency and considering the current geopolitical context. In Latin America and the Caribbean (LAC), with only two countries as signatories, the region has a long path ahead with specific political and socio-economic challenges to address. Thus, shifting financial flows of developed countries from fossil fuels to support a just energy transition in LAC and other regions will be key for a global alignment of public finances with climate objectives.”

Kate DeAngelis, International Finance Program Manager, Friends of the Earth US said: “President Biden started his presidency with bold statements on the need to end overseas fossil fuel financing, but has spent the past year taking little real action. Rather than using this moment to cave to the oil and gas industry, the Biden-Harris Administration must end US financing for international fossil fuels and promote a sustainable, renewable energy future.”

Simone Ogno, Finance and Climate campaigner, ReCommon said: “Italy’s dependence on Russian gas has been made possible thanks to public finance, especially SACE, the Italian export credit agency. Public finance is now at risk of driving the country toward new ‘bloody’ gas suppliers while gas prices stay high and more and more people are forced to choose between a meal and paying their energy bills. It’s time for Italy’s public finance to play its part and Draghi’s government has to clarify how it will implement the Glasgow Statement by pulling SACE out of fossil finance and breaking the country’s dependence on fossil fuels once and for all.”

Marius Troost, Policy Officer, Both ENDS said: “Signing the Glasgow Statement is one thing, translating it into ambitious policy is another. The science is clear about the need to stop financing fossil fuels and the role public finance plays in this process. It is therefore crucial that the signatories of the Statement, including The Netherlands, follow up on their promises. There can be no room for exceptions and loopholes that water down the commitment.”

David Ryfisch, Team Leader International Climate Policy, Germanwatch said: “Fossil energies are risky and create long-term dependencies. This has become painfully clear for many G7 states, particularly Germany, in the last few months. Learning from their own mistakes, all G7 countries should join the Glasgow Statement and stop international investments into fossil fuels and instead accelerate their renewable energy finance.”

Anna-Lena Rebaud, Climate and Just Transition campaigner, Friends of the Earth France said: “During his first mandate, Emmanuel Macron has been a master in communication, but has repeatedly failed at ambitious climate action. The climate plan on export finance adopted in 2020 is a good example. After joining the Glasgow Statement, the new government cannot fail again at effectively putting an end to all public support to fossil fuels.”

Nicole Rodel, Communications Campaigner, Oil Change International said: “Russia’s war in Ukraine and the current fuel prices spikes have prompted some Glasgow Statement signatories to suggest they may backtrack and use their international public finance to lock-in new fossil infrastructure like the East African Crude Oil Pipeline, new import terminals for U.S. LNG, and Equinor’s extraction projects in Tanzania and Canada. We cannot afford this. What is desperately needed instead is for global leaders to double down on the Glasgow statement and support rapid decarbonization packages for renewables and energy efficiency in the areas that need it most. The pandemic has shown that governments can rapidly mobilize massive sums of public money. This is the moment to do it, and accelerate the transition to a clean and fair future without fossil-fueled conflict.”

Read the letters in full:

Notes:

  • The $24 billion per year quoted above is from the open-access Public Finance for Energy Database (energyfinance.org), a project of Oil Change International that tracks financial flows to fossil fuels and clean energy from G20 bilateral development finance institutions (DFIs), export finance agencies (ECAs), and the multilateral development banks (MDBs). For non-G20 countries, Oil Change International has used the same methodology to estimate fossil fuel finance totals.
  • The countries and the institutions that have signed the joint Glasgow statementon public finance include: Agence Française de Développement (AFD), Albania, Canada, Costa Rica, Denmark, Banco de Desenvolvimento de Minas Gerais (BDMG), The East African Development Bank (EADB), El Salvador, Ethiopia, Fiji, Finland, Netherlands Development Finance Company (FMO), France, Germany, Mali, Marshall Islands, New Zealand, Moldova, Portugal, Slovenia, South Sudan, Spain, Sri Lanka, Switzerland, the European Investment Bank, The Gambia, The United Kingdom, the United States and Zambia.
  • An April 2022 briefing from Oil Change International on recent trends in international public finance for fossil fuels, and how these financial flows could be used instead to unlock a globally just transition.
  • A March 2022 report from BankTrack, Milieudefensie, and Oil Change International found that Global North public finance institutions have backed at least $37 billion for fossil fuels in Africa since the Paris Agreement. Government backing and preferential rates meant this finance has had an outsized impact on private financial flows, pushing forward fossil fuel projects and crowding out renewable alternatives. Meanwhile, poor contract terms, debt traps, and disproportionate ownership by foreign multinationals have meant this finance has undermined development.
  • legal opinion by Professor Jorge E Viñuales from the University of Cambridge and Barrister Kate Cook of Matrix Chambers argues that governments and public finance institutions that continue to finance fossil fuel infrastructure are potentially at risk of climate litigation.

###

Oil Change International is a research, communications, and advocacy organization focused on exposing the true costs of fossil fuels and facilitating the ongoing transition to clean energy.

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