Handful of governments block clean energy transition with billions in international finance for fossil fuels

9 April 2024 – Despite the biggest increase in G20 and Multilateral Development Bank (MDB) international finance for clean energy in 2022, a report published today reveals a handful of bad actors are blocking a just transition to renewable energy with outsized financial support for fossil fuels. 

The new report, Public Enemies: Assessing MDB and G20 international finance institutions’ energy finance by Oil Change International and Friends of the Earth United States, and endorsed by 23 other civil society organizations [1], highlights an alarming trend in international energy finance. G20 and MDB international public finance for energy between 2020 and 2022 poured fuel on the fire by contributing a staggering $142 billion towards fossil fuels, while only $104 billion supported clean energy projects. The report has been released alongside updated energy finance data on energyfinance.org. 

To limit warming to 1.5°C in line with international climate agreements, 60% of already-developed fossil fuel reserves must stay in the ground. In light of these limits, the IEA has sent a clear message that there should not be any new oil and gas field or LNG investments – public or private – beyond what was already committed as of 2021. 

The findings reveal that between 2020 and 2022 the wealthiest G20 nations are the primary culprits behind continued investments in fossil fuels, with Canada, Korea, and Japan as the worst offenders. 

The report also highlights where there is momentum to shift public finance out of fossil fuels. It shows that coal exclusion policies have worked to nearly eliminate all international public finance for coal. Seven G20 countries are also signatories to the CETP, and pledged to end their international public finance for fossil fuels by the end of 2022 and prioritise support fully towards the clean energy transition. While many signatories have followed through on their commitment, a few CETP signatories are undermining this progress, including the United States, Italy, and Germany, by continuing to provide billions of dollars to fossil fuel projects well past the end of 2022 deadline. If countries honor their existing commitments to end not only coal finance but also oil and gas finance, including their CETP commitment to negotiate an oil and gas ban at the OECD, it will shift $33.5 billion annually out of fossil fuels. 

Claire O’Manique, Public Finance Analyst at Oil Change International, said: 

“While rich countries continue to drag their feet and claim they can’t afford to fund a globally just energy transition, countries like Canada, Korea, Japan, and the US appear to have no shortage of public funds for climate-wrecking fossil fuels. We must continue to hold wealthy countries accountable for their role in funding the climate crisis, and demand they move first and fastest on a fossil fuel phaseout, to stop funding fossil fuels, and that they pay their fair share of a globally just transition, loss and damage and adaptation finance.” 

Kate DeAngelis, Senior International Finance Program Manager at Friend of the Earth United States, said: 

“While international public finance could be a catalyst for the just energy transition, government leaders are failing to use it to deliver clean energy solutions where they are most needed. As this report highlights less than 10% of the G20 and major multilateral development bank financing is even reaching low-income countries where energy access needs are greatest. Even worse, a shocking three quarters of that finance is being channeled to climate-wrecking fossil fuel projects that deliver virtually no energy access to communities, and instead, lock in more pollution, climate-wrecking emissions, and devastation.”

Peter Bosip, executive director of the Centre for Environmental Law & Community Rights (CELCOR) said: 

“International public finance streamed into Papua New Guinea over a decade ago to fund a disastrous liquefied natural gas project. Despite the human rights abuses and environmental destruction, these same institutions are set to support a related gas project that is likely to have similarly deleterious effects. This report demonstrates that Papua New Guinea is not alone – international public finance is still providing billions every year for fossil fuels. It is time for public finance institutions to learn some lessons from past mistakes and refuse to support Papua LNG and other fossil fuel projects.”

Makiko Arima, Senior Finance Campaigner at Oil Change International said: 

“Japan is derailing the transition to renewable energy across Asia and globally. Despite its G7 commitment to end fossil fuel financing, its public financial institutions like the Japan Bank for International Cooperation (JBIC) continue to support new fossil fuel projects, including the Scarborough gas field in Australia and gas power plants in Mexico. JBIC is currently investigating a claim that it failed to follow its social and environmental safeguards in developing the Philippines’ first LNG import terminal in Batangas. Japan needs to put people and planet over profit, and shift its finances from fossil fuels to renewables.”

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Regional press releases on this report are available for the United States, Canada, Japan, Korea, and Italy.

Notes:

[1] You can download the report here. 

This report is an update to the November 2022 Report, At A Crossroads: Assessing G20 and MDB International Energy Finance Ahead of Stop Funding Fossils Pledge Deadline, which looked at G20 country and MDB traceable international public finance for fossil fuels from 2019-2021 and found they are still backing at least USD 55 billion per year in oil, gas, and coal projects.