New OECD Coal Financing Restrictions Represent Weak Progress
Washington, DC – Today the OECD Export Credit Group announced new restrictions on its support for overseas coal projects. These restrictions build on the Coal-Fired Electricity Generation Sector Understanding that was negotiated in 2015 and went into effect 1 January 2017. That agreement prevented OECD-member export credit agencies (ECAs) from supporting coal-fired power plants that were less efficient unless they were in developing countries. Unfortunately, there were loopholes that allowed for continued support even for coal plants that did not meet these restrictions. Today’s restrictions would end ECA support for coal plants that do not have carbon capture, utilization and storage (CCUS) equipment in place. Still some export of equipment for retrofitting plants with CCUS or reducing emissions will be allowed if lifetime and capacity of coal plants is not extended. The restrictions do not address coal mines and related infrastructure, nor oil and gas financing even if the latest IEA report shows that investments in new fossil fuel production need to end this year to limit warming to 1.5°C.
Export credit agencies are the largest providers of public finance for fossil fuels, providing $40.1 billion a year in public support between 2016 and 2018. They are lagging behind other institutions in making progress to reduce their fossil fuel support. The United Kingdom (UK) is the only ECA thus far that has announced an immediate end to new international public finance for coal, oil and gas. Meanwhile, development finance institutions, including the European Investment Bank, the Dutch development bank FMO and the French Development Agency, have adopted restrictions to their oil and gas financing. At the upcoming global climate conference, COP26, Civil Society Organizations (CSOs) want to see progress on this agenda and the UK and the EIB are inviting other countries and institutions to join them in releasing a joint statement on ending public finance and prioritizing clean energy finance.
Quotes:
Kate DeAngelis, International Finance Program Manager, Friends of the Earth US, said: “OECD export credit agencies have failed to make meaningful progress on restricting their support for fossil fuels. Today the OECD has failed to completely end support for coal plants or coal mines and has not even touched on oil and gas, which receives tens of billions more in support than coal every year. It is time for export credit agencies to finally admit the negative role their financing plays in exacerbating the climate crisis and hurting the lives of local communities throughout the world.”
Laurie van der Burg, Global Public Finance Campaign Co-manager, Oil Change International, said: “By continuing to prop up fossil fuel projects with huge sums of public money, Export Credit Agencies and the governments that oversee them push the world far beyond 1.5°C, while also putting themselves at risk of climate litigation. At the upcoming global climate conference, ECAs should join the UK in committing to end international support for fossil fuels and instead prioritize using public money for clean energy.”
Antonio Tricarico, Programs Director, ReCommon, said: “This is a missed opportunity for major economies to finally walk the talk on climate and decarbonise the portfolio of their export credit agencies. These remain a fossil black hole in the strategy to align international finance with climate goals under the Paris Agreement. If truly committed in the fight against climate change, EU countries should move on their own and regulate these agencies at regional level.”
Expert Contacts: Kate DeAngelis, [email protected], +12023204742
Antonio Tricarico, [email protected], +393288485448
Laurie van der Burg, [email protected], +31639020914