More than 20 countries across the globe — including the U.S., Canada, Finland, Portugal, and Ethiopia — vowed Thursday to cut off public financing for international fossil fuel projects by the end of next year, a pledge climate campaigners hailed as a positive step that must be accompanied by action.
The nations’ commitment came after research published by Oil Change International and Friends of the Earth U.S. showed that between 2018 and 2020, G20 countries and their multilateral development banks provided at least $63 billion USD per year in international public financing for oil, gas, and coal projects — 2.5 times more than they provided for renewable energy.
“Last year at this time, I would not have thought we would see countries commit to ending billions of dollars in support for international fossil fuel projects,” Kate DeAngelis, manager of the International Finance Program at Friends of the Earth U.S., said in a statement Thursday. “While this is welcome progress, countries, especially the U.S., must hold firm to these commitments, shutting off the spigot to fossil fuel companies like Pemex and Exxon.”
Notably absent from the pledge — which was announced at the COP26 climate summit in Glasgow, Scotland — are some of the world’s biggest funders of global fossil fuel projects, including Japan, South Korea, and China. The full list of signatories, including nations and financial institutions, can be viewed here.
While applauding the new commitments as necessary to “stop adding fuel to the fire” of the climate crisis, Laurie van der Burg of Oil Change International told the Washington Post that the pledge must be scrutinized and made as strong as possible to ensure there are no loopholes allowing indirect funding of fossil fuel development.
“Only this way can we avoid the worst climate crisis scenarios,” she said.
In May, the International Energy Agency said in a landmark report that governments and banks must stop funding new coal, oil, and gas projects if the world is to reach net zero emissions by 2050.
Released Thursday by the U.K. government, the finance pledge declares:
- We will prioritize our support fully towards the clean energy transition, using our resources to enhance what can be delivered by the private sector. This support should strive to ‘do no significant harm’ to the goals of the Paris Agreement, local communities, and local environments.
- Further, we will end new direct public support for the international unabated fossil fuel energy sector by the end of 2022, except in limited and clearly defined circumstances that are consistent with a 1.5°C warming limit and the goals of the Paris Agreement.
- We will encourage further governments, their official export credit agencies, and public finance institutions to implement similar commitments into COP27 and beyond. This includes 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. For government signatories, this will also guide our approach on the boards of multilateral development banks.
“Our joint action,” the document reads, “is necessary to ensure the world is on an ambitious, clearly defined pathway towards net zero emissions that is consistent with the 1.5°C warming limit and goals of the Paris Agreement, as well as the best available science and technology.”
Tasneem Essop, executive director of Climate Action Network International, said in a statement that the new declaration is “a step in the right direction but must be scaled up with more governments and public finance institutions, including the multilateral development banks, committing to end finance for fossil fuels.”
“This public money,” said Essop, “needs to be urgently redirected into a just energy transition that ensures clean universal energy access for communities in the Global South and support for communities and coal, oil, and gas workers without saddling countries with any further debt.”
Speaking to the Post, van der Burg expressed hope that the latest pledge will “lead to the same domino effect that we’ve seen with coal finance.”
This week, dozens of countries joined a global alliance vowing to phase out coal use by the 2030s — the target for developed nations — or the 2040s. As CNBC reported Thursday, “China, India, and the United States, the three biggest burners of coal worldwide, have not signed up.”
Katharina Rall, senior environment researcher at Human Rights Watch, said Thursday that the new fossil fuel finance pledge — if fully implemented — would “be an important step toward governments meeting their human rights obligations to address the climate crisis.”
“All governments need to urgently end all support for fossil fuels and ensure a just transition to affordable clean energy to help prevent catastrophic climate impacts on human rights,” Rall added. “Countries that choose not to sign on… are signaling a lack of regard for their human rights obligations and for the rights of communities around the world already facing a mounting toll from climate impacts.”