Cutting Fossil Fuel Financing

Fossil fuel companies continue to be propped up by the government — often in the form of tax cuts, subsidies, and public financing. Tax dollars flow through institutions like the US Export-Import Bank to invest in projects across the globe. Often, these tax dollars are funding overseas fossil fuel projects that are wreaking havoc on our environment and local communities in places like Mozambique, India, Bahrain, Papua New Guinea — to name a few.

Given the enormous climate impact that these projects have, organizations like Friends of the Earth US have teamed up with partners to push for domestic and international change. And we successfully got a climate pledge from countries, including the United States, to tackle this issue at its root. At the 2021 United Nations Climate Change Conference (COP26) in Glasgow, more than 30 countries signed a commitment to end international public finance for fossil fuels. The countries also committed to prioritize funding for clean energy. If implemented fully, this resolution could shift $28 billion a year from fossil fuels into clean energy.

Since the commitment was signed in 2021, Friends of the Earth US has worked with international groups to track overseas energy financing to ensure that countries are on track with these commitments. We have pressured those who are not taking the steps they committed to — and massive progress has been made thanks to this tireless activism. 

Fossil fuel financing from those signers is falling drastically, and most signatories have either eliminated or considerably reduced fossil fuel financing. In the first year of this commitment being implemented, the signers cut fossil fuel funding up to $15 billion — that is nearly a two-thirds decrease in fossil fuel costs compared to years prior. 

In particular, the United Kingdom’s export credit agency (UK Export Finance) cuts its fossil fuel transactions from $11 billion to zero in just ten years. Previously, the agency had allocated more than 99% of its energy finance to fossil fuels. This shows just how successful the activism of groups like Friends of the Earth US has been in pressuring countries to make substantive steps to combat the climate crisis.

While vast progress has been made to decrease fossil fuel funding, countries have failed to increase funding for clean energy at the same rate. Countries need to ensure they are scaling up clean energy finance at a fast enough rate to make a real climate impact. 

We have seen great success pressuring other countries; however, the United States is the biggest violator of the COP26 commitment. In 2023 and, so far, in 2024, the US provided $3.5 billion for overseas fossil fuel projects. The US Export-Import Bank alone just approved financing for six mega-projects, including $500 million to develop 300 oil and gas wells in Bahrain. The US is the largest member of the coalition of signers and is the biggest problem. We will continue to pressure our export credit agencies to take this commitment seriously and accept responsibility as the largest historical climate polluter.