Biden breaks major international climate promise as other countries make good on commitment to end fossil fuel finance
WASHINGTON — The Biden Administration has broken a major promise to end its international public finance for fossil fuels, a new report by Oil Change International highlights.
At the COP26 United Nations climate conference, the United States joined 38 other countries and institutions in signing the ‘Glasgow Statement,’ a commitment to end public financing for international fossil fuel projects by the end of 2022. The report shows that a growing group of signatories including Canada, the United Kingdom, France, Finland, Sweden, Denmark, and New Zealand have made good on their commitment and are shifting billions of dollars out of fossil fuels. However, the United States has failed to live up to this promise.
During the 2020 presidential election, Joe Biden promised to end U.S. support for dirty energy projects abroad. Once in office, President Biden issued an Executive Order that called on U.S. government agencies to “promote ending international financing of carbon-intensive fossil fuel-based energy while simultaneously advancing sustainable development and a green recovery.” Then, at COP26, the Biden Administration further solidified these commitments by signing the Glasgow Statement.
Yet from 2019 to 2021, the United States supported an annual average of USD 2.6 billion in fossil fuel projects, compared to USD 358 million for renewables — more than seven times greater than its USD 358 million investment in renewables.
The Biden Administration has taken the unusual step of developing a policy in response to the Glasgow Statement at its bilateral financing agencies but not making it public, even at the request of members of Congress, making it impossible for the public to scrutinize the policy.
In December 2021, a leaked diplomatic cable revealed that the U.S. government has issued interim guidance to government agencies on restricting public finance for international fossil fuel projects, but the guidance appears to fall short of the Glasgow Statement commitment. In particular, it likely allows for continued support for some upstream and midstream gas, and contains a substantial loophole for projects that have national security benefits.
Despite the Glasgow commitment, the Export-Import Bank of the United States (U.S. EXIM) and the U.S. International Development Finance Corporation (DFC) are considering providing financing for fossil fuel projects that would represent a violation of the commitment. These include DFC support for LNG projects in Vietnam and South Africa, EXIM support for gas projects in Mexico and Iraq, an oil refinery expansion in Indonesia, and oil and gas development in Bahrain.
Although the end-of-2022 deadline to implement a Glasgow Statement policy has elapsed, campaigners are urging the Biden Administration to fulfill their promise by issuing public interagency guideline that bars new public fossil fuel support with no exemptions for gas projects and closes the potential widely-defined loophole for projects with “national security” implications that appeared in the leaked memo.
Kate DeAngelis, International finance program manager at Friends of the Earth U.S., said this:
The United States has long claimed to be a world leader in climate action, yet fails to back this up with meaningful action or policy. U.S. agencies like the U.S. Export-Import Bank and U.S. International Development Finance Corporation continue to be piggy banks for fossil fuel projects from Mexico to South Africa to Indonesia, as these nations suffer from climate change.
President Biden must make his administration’s policy public, which would catalyze other countries to stop providing billions of dollars to polluting projects all over the world. True leaders do not blink when faced with a global climate crisis.
- The new report by Oil Change International, available here, reveals that the Glasgow Statement has already shifted an estimated USD 5.7 billion per year out of fossil fuels and into clean energy, with the potential of a further shift of USD 13.7 billion per year if all the Glasgow Statement signatories fulfill their commitments.
- Out of the 16 high-income signatories to the Statement, eight have adopted policies that broadly meet the promise they made in Glasgow (Canada, the European Investment Bank, the United Kingdom, France, Finland, Sweden, Denmark and New Zealand). Four of the 16 high-income countries (Belgium, Switzerland, The Netherlands, Spain) have new policies that further restrict fossil fuel support but leave major loopholes and/or do not meet the end of 2022 deadline. Four of the 16 high-income signatories (Germany, Italy, Portugal, United States) have yet to publish new or updated policies.
- Public finance for fossil fuels is a key driver of the climate crisis. Government-backed finance helps de-risk fossil fuel projects, making it more attractive for private sector financiers to invest. There is no solution to climate change without an end to public finance for fossil fuels.
- Thirty-nine countries and institutions signed the Glasgow Statement at the UN COP26 Climate Change Conference in Glasgow. Thirty-nine signatories (full list here) aim to “end new direct public support for the international unabated fossil fuel energy sector by the end of 2022” and instead “prioritize our support fully towards the clean energy transition.” According to the International Institute of Sustainable Development, If all signatories follow through on their pledges with integrity, this could shift USD 28 billion per year from fossil fuels to jumpstart the clean energy transition.
- In its latest report, the IPCC highlighted public finance for fossil fuels as ‘severely misaligned’ with reaching the Paris goals, but that if shifted, it could play a critical role in closing the mitigation finance gap, enabling emission reductions and a just transition. More background on the role international public finance plays in shaping energy systems is available in this Oil Change International briefing.
- A 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.
- In May 2022, 122 civil society organizations sent letters to signatories to the Glasgow Statement calling on them to meet their commitment. Letters to Germany, Italy, Canada, France, the United States, and other non-G7 countries can be found here.
Kate DeAngelis, Friends of the Earth U.S., [email protected]
Collin Rees, Oil Change International, [email protected]