Over 20 countries and institutions have put out a joint statement committing to end direct international public finance for unabated coal, oil and gas by the end of 2022 and prioritize clean energy finance.
Following a wave of practical decisions to end international coal finance this year, this marks the first international public commitment addressing public finance for oil and gas.
If implementation of this is effectively done, it could directly switch more than US$15 billion a year of government-backed support out of fossils into clean energy. This could even become more significant if initial signatories are successful in convincing others to join.
Switching public finance from fossil fuels into clean energy is an urgent action. The International Energy Agency (IEA) indicates that to limit global warming to 1.5 degree Celsius means there is need to mark the end of new investments in not just coal, but also new oil and gas supply.
Lisa Fischer, Programme Leader Climate Neutral Energy Systems, E3G, commented:
“This statement is a powerful signal to policy makers and investors alike that high climate and investment risks are an inherent part of oil and gas finance, and that no investment in new oil and gas supply is needed.
“It shows growing confidence that employment and revenue opportunities are strongest in the clean energy sector. Every cent of public finance should be used to open these opportunities for nations across the globe.”
Lisa Fischer, Programme Leader Climate Neutral Energy Systems, E3G
Public Finance for Clean Energy Remain Stagnated
However, a research by Oil Change International and Friends of the Earth US shows that between 2018 and 2020, G20 countries’ international public finance institutions and Multilateral Development Banks (MDBs) still provided finance by at least US$188 billion in fossil fuels abroad. This was 2.5 times more than G20 and Multilateral Development Banks (MDBs) support for renewable energy, which averaged US$26 billion per year.
Since 2014, public finance for clean energy has remained stagnant, despite the need for it to grow exponentially to ensure universal access to clean energy and to stay below the 1.5°C limit. The IEA indicates that annual public and private investments into clean energy should reach nearly US$4 trillion by 2030.
Tasneem Essop, Executive Director, Climate Action Network International, commented:
“Shutting fossil fuels down is critical for tackling the climate crisis. This announcement 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 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.”
Tasneem Essop, Executive Director, Climate Action Network International
Large Financiers of Fossil Fuels Missing in Signing Statement
Countries that lag in this respect include Japan (US$10.9 billion/year), Korea (US$10.6 billion/year), and China (US$7.6 billion/year), which are the largest providers of international public fossil fuel finance in the G20. Similarly, Italy (US$2.8 billion per year) and Spain (US$1.9 billion per year), some of the biggest EU fossil fuel financiers, are also missing.
The joint statement brings together some of the largest historic providers of public finance for fossil fuels— Canada, the United States, the UK and the European Investment Bank (EIB).
However, low-income countries such as Mali and Costa Rica who have also joined in expressing commitment to the call to halt public finance to fossil fuel sends a signal that large financiers cannot be excused.
