Report: Despite 2021 funding cuts, international public finance for fossils could rebound if gas is excluded from US climate policy
Biden breaks promise to end overseas fossil fuel finance by investing 83% of U.S. international public energy finance into fossil fuels from 2019-2021WASHINGTON – New research released today by Oil Change International and Friends of the Earth U.S. reveals that in 2021, G20 countries and major multilateral development banks financed USD 33 billion for oil, gas, and coal projects, about half of their 65 billion average for 2018-2020. This preferential, government-backed fossil fuel financing still continues to outweigh support for renewable energy, which received just $33 billion in 2021.
Early data from 2022 added to some temporary data limitations for Korea – one of the largest financiers – in 2021 suggest that a rebound in support for fossil fuels is likely, as key countries send signals of returning to gas. Such backsliding could only be prevented if countries implement their Glasgow commitments to end international fossil fuel finance by the end of 2022.
At last year’s global climate conference in Glasgow, the United States made headlines when it joined a pledge with 38 other countries and institutions to end international public finance for fossil fuels by the end of 2022, and fully prioritize public finance for clean energy. Yet from 2019 to 2021, the United States supported an annual average of $2.6 billion in fossil fuel projects, compared to $358 million for renewables – more than seven times greater than its $358 million investment in renewables. Today’s report shows that, with less than two months left until the end of 2022 deadline, a drastic trajectory change is needed for the United States to keep its promise.
The report also shows that the United States trails other countries in implementing its pledge to shift public financing out of fossil fuels and into clean energy. The UK, France, Belgium, Denmark, Sweden and Finland have already published policies to turn the COP26 pledge into action. The United States has refused to make public the December 2021 guidance it released internally. The new NGO report recommends that the U.S. release its guidance and avoid loopholes – like gas – that will render the policy useless.
Key findings:
- Japan, Canada, Korea, and China again provided the most public finance for fossil fuels between 2019 and 2021, providing an annual average of $10.6 billion; $9.8 billion; $7.1 billion, and $6.7 billion respectively. These countries have remained in the top position for the entire 2013-2021 dataset.
- 53% of international public finance for fossil fuels flowed specifically to gas projects. This funding of $30 billion a year is larger than what any other energy type received from 2019 to 2021, and greater than all renewable energy finance combined. In comparison, coal received $5.9 billion a year, and the aggregated “oil and gas” category $23 billion.
- International public finance for renewable energy has remained largely stagnant. Trade and development finance for renewable energy has increased only slightly from an annual average of $27 billion between 2016-2018 to $30 billion from 2019-2021 instead of growing exponentially, as is needed to support a globally just energy transition. This means that initial decreases in fossil fuel support do not indicate a clear shift to renewable energy support.
- ECAs were the worst public finance actors, providing 7 times as much support for fossil fuels than clean energy, with $34 billion per year for fossils and just $5 billion for clean energy.
- G20 countries and major multilateral development banks (MDBs) financed an annual average of USD 56 billion for oil, gas, and coal projects in 2019-2021. This preferential, government-backed fossil fuel financing also still outweighed support for renewable energy, which received an annual average $29 billion in clean energy support in 2019-2021.
Quotes:
“As the world’s largest historical contributor to climate change, the United States has a duty to show true leadership by upholding President Biden’s commitment to shift international public finance away from fossil fuels toward clean energy, said Kate DeAngelis, international finance program manager at Friends of the Earth U.S. “Instead the U.S. Export-Import Bank and U.S. International Development Finance Corporation have bankrolled tens of billions of dollars to overseas fossil fuel projects that harm communities, kill workers and community members, and cause environmental destruction. Biden’s failure to publish a comprehensive policy for international energy finance means the U.S. is breaking its promise rather than ending this deleterious financing.”
“International public finance is urgently needed to build a globally just energy transition. But it cannot play this critical role if G20 countries and MDBs continue to funnel $55 billion annually into climate-wrecking fossil fuel projects,” said Claire O’Manique, a lead author and Public Finance Analyst at Oil Change International. “The climate movement will continue to hold these public institutions accountable for their role in funding the climate crisis. It is well past time that public finance dollars are spent to remedy fossil fuel colonialism by funding real solutions.”
“This report highlights the immense amount of funding that the world’s wealthiest countries continue to pour into fossil fuel projects in Africa to the detriment of Africa’s citizens,” said Anabela Lemos of Justica Ambiental/Friends of the Earth Mozambique. “The current rush for Africa’s fossil fuel resources amounts to a perpetuation of extractive modes of colonial exploitation, devastating the continent’s agricultural and forest resources and depriving local communities of their livelihoods and sometimes even their lives.”
“Public finance continues to support coal and other fossil fuels in Asia despite the current climate emergency,” said Lidy Nacpil of Asian Peoples’ Movement on Debt and Development. “The devastating impacts of the climate crisis is most dramatically and tragically demonstrated by the recent catastrophic flooding that saw a third of Pakistan under water. If governments and multilateral institutions do not end their support for the fossil fuel industry, these tragic events will only become more common and more severe.
“Hard earned taxpayers’ money cannot be used by governments to prop up fossil fuel projects domestically or abroad. The G20 countries who together contribute more than 80% of global emissions cannot support this criminal waste of public resources that is driving the climate emergency, exacerbating conflicts, adding to the cost of living crisis and increasing poverty, sickness and climate disasters,” said Tasneem Essop, Executive Director at CAN International. “Public finance – the people’s money – must be used to help people transition to clean and sustainable energy systems and towards a climate safe future for all.”
“It’s time for governments to show what real climate leadership looks like and end international public finance for fossil fuels,” said May Boeve, Executive Director at 350.org. “If we want to keep global heating below 1.5 degrees, a managed decline of fossil fuel production is the only way, and the only language these profit-mongering fossil fuel companies understand is money. We need an efficient use of energy alongside a massive roll-out of renewables. It’s time to turn off the money pipeline to dirty fossil fuels and invest in all of our futures.”
“Especially considering the current energy crisis in Germany, there is a clear need to support other countries to avoid German mistakes that have exacerbated its vulnerability. That means building energy security through renewables and not future fossil fuel dependency,” said Aki Kachi, Senior Climate Finance Policy Analyst at NewClimate Institute. “It is imperative that Germany’s implementation of the Glasgow Statement is ambitious instead of seeking to find loopholes.”
“International financing from wealthy G20 governments’ public finance institutions for energy projects with fossil fuel sources in Indonesia, has contributed greatly to the sinking of coastal villages in Indonesia. Every year, 1 hectare of land is lost along the coastal area of Demak, Central Java Province due to rising sea levels, besides the financing of this climate-destroying project has also destroyed the economic life of fishermen and increased the number of fishermen who died at sea,” said Hadi Jatmiko, Head of WALHI’s National Campaign Division. “In 2010 the number of fishermen who died was recorded as 87 people. But in 2020, the number has increased to 251 people. Due to unpredictable weather driven by climate change, fishermen in Indonesia can only go to sea for six months of the year. The rest of the year they have to change professions to become rough coolies or hawkers. On top of this, flash floods, landslides, and seroja storms are becoming more intense and more frequent throughout Indonesia. Stopping financing for climate-destroying projects and fake solutions to the climate crisis cannot be delayed, must be done now unconditionally, shifting financing to clean, equitable, sustainable and decentralized energy projects.”
Contacts:
Bronwen Tucker — [email protected] / +1-587-926-7601 (ET)
Nicole Rodel – [email protected] / +27842570627 (SAST)
Shaye Skiff – [email protected] / +1 (202) 222-0723 (ET)