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Press Release

EU, UK, and Canada move to phase out fossil fuel finance at OECD

US, South Korea, and Japan fail to follow suit

The European Union, the United Kingdom, and Canada are ready to be climate leaders by proposing phasing out fossil fuel finance through Export Credit Agencies at the OECD. This move reflects a commitment to aligning public financing with climate goals and the urgent need to transition to clean energy.

US, South Korea, and Japan fail to follow suit

This week in Paris, some of the world’s wealthiest countries met at the Organisation for Economic Co-operation & Development (OECD) headquarters to discuss how Export Credit Agencies (ECAs) – the world’s largest public financiers for fossil fuels – can be aligned with climate goals. The UK, Canada and the EU put forward proposals to extend coal restrictions to oil and gas.

The United States – a key influencer in the OECD process – did not take position on the proposal yet, despite President Biden’s multiple promises at the G7 and at the 2021 COP26 UN climate talks to end public finance for fossil fuels. Japan and South Korea, two of the world’s biggest financiers of international fossil fuel projects, also failed to come out in support of the proposal, despite both countries signing of the Paris climate agreement and Japan’s G7 commitment to end its international public finance for fossil fuels.

Ahead of the conclusion of OECD Export Credit Agency negotiations tomorrow, Nina Pusic, Strategist at Oil Change International, said:

“The European Union, the United Kingdom, and Canada are ready to be climate leaders by proposing phasing out fossil fuel finance through Export Credit Agencies at the OECD. This move reflects a commitment to aligning public financing with climate goals and the urgent need to transition to clean energy. The United States, South Korea, and Japan, however, are lagging behind. The US, for example, has not yet shown their support for this ambitious proposal, despite multiple promises to end international public finance for fossil fuels. We urge these countries to reconsider their positions and join the global effort for a livable planet. All OECD countries must join the EU, the UK and Canada in agreeing to end export finance for all fossil fuels.”

NOTES:

  • A report by Oil Change International and partners outlines that between 2018-2020, OECD countries’ Export Credit Agencies on average supported at least 41 billion USD in fossil fuel infrastructure globally. 
  • Over 250+ civil society organizations from 30 countries have called on OECD member governments to end USD 41 billion per year flowing from government-run Export Credit Agencies to fossil fuels, and free it up for clean energy instead.
  • The OECD Arrangement on Officially Supported Export Credits (the Arrangement) provides a soft law framework for ECAs of OECD countries, and is the only multilateral body that specifically regulates ECA standards. 
  • A civil society letter launched this week advocates for the implementation of the Clean Energy Transition Partnership (CETP), an already-existing international commitment that 52% of OECD negotiating countries signed onto, including the United States, Canada, Germany, and the United Kingdom. 
  • CETP signatories promised to end new direct public support for the international unabated fossil fuel energy sector by the end of 2022. The pledge explicitly commits signatories to “driving multilateral negotiations in international bodies, in particular in the OECD, to review, update and strengthen their governance frameworks to align with the Paris Agreement goals”. 
  • In 2015, the OECD Arrangement adopted the Coal Fired-Power Sector Understanding (CFSU), which heavily limited OECD-member export credit agencies (ECAs) support for coal-fired power plants after 2017. Although far from 1.5°C-aligned, the CFSU highlighted the potential of the OECD to respond to the growing threat of climate catastrophe. In January 2022, the CFSU was replaced with a new prohibitive clause on export credits for new unabated coal-fired electricity generation plants.