Australia boosts 40+ signatory partnership to end international public finance for fossil fuels

Australia has joined the Clean Energy Transition Partnership (CETP, sometimes called the Glasgow Statement) at the UN climate talks in Dubai, joining Norway, which joined on Saturday

It is a boost for CETP which now has 41 signatories (including US, Canada, and many EU countries), shifting billions per year out of fossil fuels to clean energy

Australia shifts from ‘blocking role’ it has played in the past on ending international fossil fuel finance, bolstering efforts to create new rules to end international fossil finance across the OECD

Laggards still remain with pressure on the United States and a few others to keep their promise.

Australia has joined a major international initiative to end international public finance for fossil fuels at an event held at the UK Government Pavilion today at COP28. Australia follows Norway, who also joined the initiative on Saturday.

At the 2021 COP26 UN climate summit in Glasgow, 39 countries and institutions – including many EU states, the United States, and Canada – signed the Clean Energy Transition Partnership (CETP), committing to end direct international public finance for fossil fuel projects by the end of 2022. If every signatory meets their commitment, this will shift at least USD 19.4 billion per year from fossil fuels into renewable energy.

As a new signatory, Australia will be given one year from its signature to implement its pledge. Campaigners say they will be watching Australia closely to make sure they keep their promise.

James Sherley, Climate Justice Campaigner at Jubilee Australia Research Centre, said:

“In joining the CETP, the Albanese government is taking the long-overdue step of acknowledging that foreign aid and federal export finance should not be squandered on fossil fuel expansion – which is bad for people, for planet and our economies. In Australia and across the Pacific, people are living day-to-day with the harsh realities of the climate crisis, and they have made it explicitly clear that the need to end support for coal and gas is urgent. 

“We welcome this announcement as potentially a first step on the road to phasing out fossil fuels. To deliver on its promise will require strong implementation which we will be watching closely.  We hope that signing the CETP signals a broader, genuine effort of Australia to restore its reputation on the international stage.”

Adam McGibbon, Campaign Strategist at Oil Change International, said:

“Australia joining the CETP is a positive move in the right direction. It marks the beginning of a shift away from using taxpayer-backed money to prop up the fossil fuel industry. There are many more steps along this journey, but today’s announcement strengthens the growing coalition of countries phasing out international public finance for fossil fuels.

“It’s time the last major OECD countries missing from the initiative — Japan and Korea — join too.”

A report released last year revealed that between 2019-2021, Australia’s export credit agency, Export Finance Australia (EFA), largely favored fossil fuels, with only around 19% of financial support going to clean energy each year. EFA has also been involved in controversial projects that have made the agency the subject of legal action.

Australia’s assent also bolsters momentum towards new rules at the Organisation for Economic Cooperation and Development (OECD – the group of the world’s wealthiest countries) to end export finance support for fossil fuels. OECD countries supported fossil fuel exports by an average of USD 41 billion from 2018 to 2020, almost five times more than clean energy exports. The EU, Canada, and UK have tabled a proposal to end this finance. Having signed onto the CETP, Australia is now expected to deliver on the CETP’s commitment to “driving multilateral commitments in international bodies” by aligning with the UK, EU, and Canada in the push for oil and gas restrictions at the OECD. With Australia and Norway on-side, the majority of countries in the OECD working group on export finance are in favor of ending fossil fuel export finance, paving the way for further fossil fuel restrictions.

Campaigners also called on the Australian government to seize the moment to go further by committing to end new oil and gas licensing and ending domestic fossil fuel subsidies, in line with what science requires.

Although many signatories have kept their CETP promise to end international public finance for fossil fuels, some have not, including notably the United States, Italy, and Germany. The U.S. has yet to publish its policy to respond to the CETP and the US Export-Import Bank continues to finance fossil fuels, undermining President Biden’s multiple pledges to end this finance. Italy and Germany’s policy contain major loopholes that will allow a significant amount of fossil finance to continue. Campaigners are continuing to call on these countries to keep their promises.

Attendees at the UK Government event also heard how the CETP, now two years old, is shifting billions in international public finance from fossil fuels to renewable energy. However, while this finance is beginning to shift to clean energy, a report released last week from the International Institute for Sustainable Development calls on CETP signatories to develop more ambitious policies to scale up clean energy.

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NOTES:

The Clean Energy Transition Partnership was launched at the 2021 UN COP26 Climate Conference in Glasgow. The signatories – including many EU countries, the US and Canada – pledged to “end new direct public support for the international unabated fossil fuel energy sector by the end of 2022” and instead “prioritise our support fully towards the clean energy transition.”

The IPCC’s AR6 report highlights 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.

Oil Change International publishes Leaders & Laggards, a policy implementation tracker that outlines progress on implementation of the CETP, which will be regularly updated in the lead up to and during COP28. Oil Change International also publishes the Fossil Finance Violations Tracker, showing where countries are still financing fossil fuel projects despite their pledge.

Oil Change International research shows that in 2019-2021 alone, G20 countries and the multilateral development banks (MDBs) they govern provided at least USD 55 billion per year in international public finance for oil, gas, and coal projects. This fossil fuel finance was 2 times more than their support for renewable energy, which averaged only $29 billion per year. This shows the urgent need to implement the CETP – this would tip the public finance for energy balance from fossil fuels to clean energy.

Campaigners called on Australia to go further, ending new oil and gas licensing and ending domestic fossil fuel subsidies. A previous Oil Change International report brands Australia as one of a small number of ‘Planet Wrecker’ countries endangering global climate targets. Australia is poised to be the world’s eighth largest expander of oil and gas extraction from 2023 to 2050. If allowed to proceed, new oil and gas fields in Australia could cause 4 Gt of additional carbon pollution over that time period, equivalent to the lifetime emissions of 25 new coal plants. The report shows that Australia is amongst five global north countries (along with the United Kingdom, United States, Canada, and Norway) responsible for a majority (51 percent) of planned expansion from new oil and gas fields through 2050.