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organization for economic cooperation and development
Climate Groups Back Efforts to End Tens of Billions in Foreign Fossil Fuel Subsidies
"This is the moment where OECD countries can turn their words into action," said an Oil Change International strategist. "All eyes are on them, the world is watching. Immediate action is necessary."
Oct 30, 2023
Over 250 climate groups from 30 countries published an open letter on Monday urging governments that endorsed a global pledge at the United Nations summit in Scotland two years ago to support new efforts to cut off subsidies for foreign fossil fuel projects.
The coalition letter came a day after the Financial Times reported that the European Union and United Kingdom—which left the E.U. in 2020—have proposals to end subsidies for foreign gas, oil, and coal projects that they plan to discuss at a closed-door Organization for Economic Cooperation and Development (OECD) meeting in France next month.
"This is the moment where OECD countries can turn their words into action," Oil Change International (OCI) strategist Nina Pusic said Monday. "Will they live up to the pledge most of them made in Glasgow in 2021 to end international public finance for fossil fuels at the OECD? All eyes are on them, the world is watching. Immediate action is necessary to align global financial flows with a habitable climate future, and this November represents a critical opportunity that we can't afford to miss."
According to the Financial Times:
People close to U.K. Export Finance, Britain's credit agency, said that Canada had committed to backing the U.K.'s planned proposal to the OECD ahead of the meeting next month. Canada's finance department said it "looked forward to working alongside like-minded partners at the OECD and in other international forums to grow and promote the clean economy around the world."
The E.U. has submitted its own proposal, according to one person familiar with the matter, after member states agreed on a draft proposal last month, according to another person familiar. It did not provide a comment.
The coalition letter highlights that the 2021 Clean Energy Transition Partnership (CETP)—whose signatories agreed to align public finance institutions with the Paris agreement's 1.5°C goal—is already shifting an estimated $5.7 billion a year to clean energy.
As part of the CETP, countries committed to driving "multilateral negotiations in international bodies, in particular in the OECD, to review, update, and strengthen their governance frameworks to align with the Paris agreement goals," the letter explains.
"This November at the OECD Export Credits Forum, your country has a critical opportunity to fulfill this commitment. Your country can do this by joining forces with other CETP signatories to support restricting oil and gas export finance at the OECD," wrote the coalition, which along with OCI includes Friends of the Earth (FOE) United States, Japan Center for a Sustainable Environment and Society (JACSES), and Environment Governance Institute (EGI) Uganda.
"Ending OECD oil and gas support is critical to limit global heating to 1.5°C," the coalition added, citing the International Energy Agency's warning that new fossil fuel investments are incompatible with the goal. "And yet, the OECD export credit agencies (ECAs) currently provide five times as much financing for fossil fuels as for clean energy every year. By putting an end to their fossil fuel financing, governments have an opportunity to free up $41 billion USD per year to support the clean energy transition."
The OECD's existing Arrangement on Officially Supported Export Credits has a prohibition from January 2021 that "shifts an estimated $4 billion per year out of highly polluting coal fired-power," the letter notes, calling for an extension of that policy "to encompass all fossil fuels, including oil and fossil gas, without any loopholes."
Some leaders at groups behind the letter took aim at specific nations, such as the United States, which is among those that have come under fire this year for continuing to dump a collective $4.4 billion into fossil fuel projects abroad.
"We have waited long enough for the United States, and other wealthy historical emitters, to be a force for good at the OECD," said Kate DeAngelis, FOE's senior international finance program manager. "The U.S. must turn away from its multibillion-dollar fossil financing and support the U.K. and Canada proposal, leading the push to finally end export credit agency support for fossil fuels."
JACSES program director Yuki Tanabe targeted Japan, which snubbed the Glasgow pledge but backed a similar one from the Group of Seven last year—and has since faced criticism for continued investments in fossil fuels.
"Japan should not be a blocker at the OECD negotiations and should agree to end its public finance for fossil fuel projects," Tanabe argued. "Ammonia and hydrogen co-firing should not be exempted as 'abatement' technologies, since the current co-firing development roadmap is not in line with the Paris goals."
EGI CEO Samuel Okulony stressed how decisions of nations like Japan affect communities where projects are based.
"The impacts of climate change in Africa are a matter of life and death, and Japan, Korea, and other OECD countries should listen to the lived realities of global south communities, who have been devastated by the impacts of climate change for decades," he said. "It is imperative that these countries make resolute commitments, support a resolution to stop public financing for fossil fuels at the OECD, and demand the global community align itself with the commitments to keep the 1.5°C target alive."
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EU Bows to Bottom-Feeding Tax Havens on Minimum Corporate Tax Rate: Oxfam
The bloc "is being held hostage by a handful of European tax havens," one expert lamented.
Dec 13, 2022
After the European Union agreed in principle late Monday night to implement a 15% minimum effective corporate tax rate throughout the 27-nation bloc, economic justice advocates rebuked officials for genuflecting to low-tax E.U. member states and warned that the deal does not go far enough to prevent large enterprises from tax dodging.
"E.U. countries disregarded the opportunity to raise the bar and set in stone a tax system that is not fit for the many crises the world is facing."
"The agreement shows how the E.U. is being held hostage by a handful of European tax havens," Chiara Putaturo, Oxfam's E.U. tax expert, said Tuesday in a statement. "The minimum tax rate is far too low, bowing to the demands of E.U. countries that profit off low tax rates, like Ireland and Malta. It includes generous exemptions allowing super-profitable and undertaxed multinationals to escape the minimum tax."
E.U. officials celebrated their plan, which seeks to ensure a baseline level of taxation on profits that corporations with annual revenues above EUR750 million ($797 million) generate through their activities on the continent. They argued that it brings the bloc closer to fulfilling its pledge to be among the first to implement international tax reforms negotiated by the Organization for Economic Cooperation and Development (OECD), including a 15% global minimum tax rate that has been denounced as woefully inadequate.
But according to Oxfam, the pact "includes a so-called 'substance carve-out,' which "allows companies to pay a lower tax rate than 15% in countries where they have many employees or tangible assets such as factories and machinery."
The anti-poverty group noted that officials in Ireland, where the primary corporate tax rate is 12.5%, have "strongly advocated" against a global minimum tax rate that exceeds 15%, while Malta has been among "the most reticent E.U. countries" during European negotiations, which have dragged on for more than a year.
In recent months, Poland, Estonia, and Hungary--home to the bloc's lowest corporate tax rate, at 9%--have also blocked progress on halting the race to the bottom in corporate tax rates within the E.U. and globally.
Following months of gridlock, E.U. ambassadors on Monday night only reached a tentative agreement on a minimum effective corporate tax rate, along with an EUR18 billion ($19 billion) funding package for Ukraine, "after Hungary dropped its veto as part of a wider political bargain giving Budapest the potential to access billions of euros of E.U. cash," the Financial Times reported.
Putaturo argued that the newly struck deal "will not fix the problem of aggressive tax competition as it is a carbon copy of the weak international tax deal."
"E.U. countries disregarded the opportunity to raise the bar," she said, "and set in stone a tax system that is not fit for the many crises the world is facing."
\u201c\ud83d\udce2 Last night, European countries bowed to EU tax havens' demand with minimum corporate #tax deal. \n\n"This deal will not fix the problem of aggressive tax competition as it is a carbon copy of the weak international tax deal", says @ChiaraPutaturo. \n\n\ud83d\udc49 https://t.co/huyyPsBnaY\u201d— Oxfam EU (@Oxfam EU) 1670917903
Once the E.U.'s proposed directive on a 15% corporate tax rate is formally adopted, member states will have until the end of 2023 to incorporate it into their own national laws.
The bloc's plan follows in the footsteps of the OECD agreement on minimum effective taxation endorsed last October by 137 jurisdictions, which Putaturo characterized as "unfair to poorer countries who only get crumbs from it."
Last year, Oxfam shared recommendations for how to improve international minimum taxation at the E.U. scale.
"The least E.U. countries can still do is guarantee a more equal division of tax revenue with low-income countries," Putaturo said Tuesday. "They can do this by reviewing unfair bilateral tax agreements."
Notwithstanding criticism from rich OECD countries, United Nations members on November 23 unanimously approved an African-led General Assembly resolution to begin discussions "on ways to strengthen the inclusiveness and effectiveness of international tax cooperation, including the possibility of developing an international tax cooperation framework or instrument" under the U.N. Tax Convention, as Common Dreams reported.
Putaturo, for her part, said Tuesday that "the E.U. should not blacklist poorer countries that do not sign up for tax agreements that go against their own national interests."
"Instead," she added, "the E.U. should listen to their demands to support a global U.N. Tax Convention."
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