Germany, Italy, Canada, United States warned to keep their climate promise on first anniversary of initiative to end public finance for fossil fuels

A UK Government event at COP27 in Egypt has marked the first anniversary of a groundbreaking international initiative to phase out international public finance for fossil fuels, one of the most concrete outcomes of last year’s UN climate summit in Glasgow.

At the COP26 summit in November 2021, 39 countries and financial institutions signed the UK-led Glasgow Statement on International Public Support for the Clean Energy Transition, committing signatories to end their direct international public financing for fossil fuels by the end of 2022, except in exceptional circumstances, and fully prioritize their public finance for the clean energy transition. 

At today’s UK Pavilion event, countries took stock of implementation efforts and announced Nepal as a new signatory to the pledge, making this country the 40th signatory. Alongside, the UK, France, Finland, Germany, the Netherlands, Sweden and the East African Development Bank presented their efforts to implement the pledge, with the EADB talking about the importance of investing in clean energy rather than fossil fuels in Africa. 

If all signatories follow through on their pledges with integrity, this will directly shift USD 28 billion a year from fossil fuels to clean energy and help shift even larger sums of public and private money away from investments in climate-harming fossil fuels.

Oil Change International’s implementation tracker has been monitoring signatory progress in fulfilling their Glasgow promise. Of the 16 high-income signatories that provide international public finance for energy, six have policies aligned or nearly aligned with the Glasgow Statement (United Kingdom, Denmark, European Investment Bank, France, Finland, Sweden). The Netherlands and Belgium have new policies that further restrict fossil fuel support but leave major loopholes, including a breach of the end of 2022 deadline. 

Germany, Italy, Canada, and the United States have yet to turn their pledge into action and are at risk of breaking their Glasgow promise as they continue to eye investments in gas, particularly for liquefied natural gas (LNG). At the UK event, German state secretary Stefen Wenzel was repeatedly challenged by audience members on Germany’s commitment to the Glasgow Statement. 

Pressure is also mounting on new signatories to join, particularly Norway and Australia. Last week, a group of former Presidents and Prime Ministers of climate-vulnerable Pacific Island states called on Australia to join the Glasgow Statement at COP27.

New public finance for energy data shows that fossil fuel exclusion policies are effective: In the last 3 years, public finance for fossil fuels dropped 36% from the annual average of $86 billion a year between 2016 and 2018. About one-quarter of this drop can be explained by the fossil fuel exclusion policies adopted by the United Kingdom, the European Investment Bank, and many finance restrictions for coal-fired power. 

Last month, the International Energy Agency published its World Energy Outlook, which shows coal, oil and gas demand plateauing this decade, and confirms that no new investments in oil and gas fields or LNG infrastructure can be permitted if the world is to keep to the 1.5°C goal of the Paris Agreement. These conclusions have not been altered as a consequence of Russia’s horrific war in Ukraine. According to the IEA, the solution to the fossil-fueled energy crisis and the climate crisis are one and the same: an accelerated transition away from fossil fuels and to clean energy. To ensure public finance supports this accelerated transition and make the shift out of fossil fuel finance and to clean energy finance a permanent one, more countries must deliver on their Glasgow pledge, while encouraging other countries to follow-suit.

Quotes:

Laurie van der Burg, Co-Manager, Global Public Finance Campaign at Oil Change International, said:

“To maintain momentum on this critical agenda, we need to see the laggard signatories turn their pledges into action. Germany, Italy, Canada and the USA have little over one month left to publish policies that deliver on the promise they made last year. Countries who haven’t joined yet, like Norway and Australia, must do so.

This is win-win – phasing out international public finance to fossil fuels means that money can be redirected to fight climate change and significantly scale much-needed affordable, reliable and clean energy solutions.”

Julia Levin, National Climate Program Manager, Environmental Defence Canada, said: “Not only is Canada falling behind on shifting fossil finance to clean energy, the government is actually backtracking. Canada continues to pour billions of public dollars into the very companies fueling the climate crisis. To repair our international reputation, we must deliver on this critical promise by the end of COP27 – without any loopholes for fossil gas or CCUS.” 

Somin Kim, Oil & Gas Finance Program Associate, Solutions for Our Climate, said: 

“Korea is one of the world’s largest financiers of fossil fuels and yet it is conspicuously absent on the Glasgow pledge. Korea lacks any restriction policies that limit public finance to oil and gas and the export credit agencies are backing controversial projects, such as the Barossa gas fields in Australia and gas in Mozambique. For credibility in the climate negotiations, Korea must sign the Glasgow statement and align its financing with the Paris Agreement 1.5C goal.”

Niels Hazekamp, Senior policy advisor at Both ENDS, said:

“Climate change is a reality. The floods in Pakistan have already killed a thousand people and caused billions in damage. Through its export support for oil and gas, the Netherlands has contributed to worsening climate change and environmental pollution for decades. The Netherlands had agreed to stop this by the end of 2022. The current policy does not. Prime Minister Rutte’s COP26 call for ‘action-action-action’ turns out to be no more than empty words if this is not remedied.”

Sophie Richmond, Big Shift Global Campaign, said:

“The Glasgow Statement also has important implications for MDBs. In the case of the EBRD and IADB, over 50% of shareholder countries are signatories and for the World Bank this figure is 45%. Currently, only the European Investment Bank has committed to shift its finance to clean energy. For the World Bank and the other MDBs, as demand for reform grows stronger, signing onto this statement would be an important signal that they are committed to shifting finance out of fossil fuels and focusing on renewable energy access.”

Simone Ogno, Finance and Climate campaigner at ReCommon, said:
“Italy already tried to weaken the pledge to stop export credit support for fossil fuel projects in the frame of the Export Finance for Future (E3F) meeting. One month to go until the end of 2022 and still no sign of implementation of the Glasgow Statement. Through its export credit agency SACE, Italy has become the 1st European fossil fuel financier, enabling the development of strategic oil and gas projects for the Russian Federation, not to mention refineries in Egypt and LNG projects in Mozambique. The time has come to end this record, without any loopholes for fossil gas or CCUS.”

Landry Nintereste, 350.org Africa Regional Director, said: 

“The worsening climate impacts across the African continent that are crippling developing nations are a testament to the need for urgent climate action. As opposed to the push for fossil expansion in Africa, it’s time to channel substantial financing towards the just transition to renewable energy. Wealthy countries and international financial institutions must commit to real climate action by cutting off financing to fossil fuels and supporting the just transition in line with the Glasgow Statement, to remain aligned with limiting global heating 1.5 degrees celsius.”

Yelter Bollen, Policy officer on Climate and Finance at Bond Beter Leefmilieu, said:

“By doling out over 3,5 billion in international fossil fuel subsidies, Belgium has poured money into aggravating the climate crisis. After signing the statement at COP26, progress has been made on export finance, but loopholes and gray areas remain. Furthermore, decision making on the statement has been wholly untransparent, and no clarity has been given on Belgium’s other financing and promotional instruments.”

Lucile Dufour, Co-Lead, Sustainable Energy Supplies at the International Institute for Sustainable Development, said: 

“One year on, the Glasgow commitment to re-orient public finance toward clean energy is still alive. Some governments, such as the UK, Denmark, France and Finland, have delivered with integrity. In other cases, signatories have not come prepared to the “implementation COP”. All signatories should swiftly adopt policies to end international public support for coal, oil and gas by the end of 2022.

More governments and public finance institutions can and should immediately rule out any new international public finance to coal, oil, and gas projects across the entire value chain. With the compounding energy price, security and debt crises, it is more important than ever for new governments to fully prioritize support for a just and clean energy transition and break free from reliance on fossil fuels.”

Fred Njehu, Senior Africa Policy Advisor, Tearfund, said:

“For people in poverty around the world, how this USD 28 billion of energy finance is spent means the difference between life and death. But at the moment, we’re still seeing too much funding for dirty fossil fuels, which is contributing to the devastating drought and flooding that we’ve seen this year. Instead, we need to scale up investment for renewable energy to usher in a clean energy transition and a safer, brighter future. Communities on the frontline of the climate crisis can’t afford any more delays.”

Aaron Pedrosa, Philippines Movement for Climate Justice, said:

“We welcome the growing commitment to the Glasgow Statement and at the same time call on the signatories to scale up their climate actions not just ending support for fossil fuel projects, but also those funded through intermediated finance, and phasing out existing ones both at home and abroad. The Global North must not just veer away from public finance from fossil fuels but must also fund climate mitigation, adaptation and loss and damage for developing countries who are in the frontlines of the climate crisis. The Philippines is one of the countries most vulnerable to climate impacts, and decisive actions must happen now to ensure its survival and that of the peoples of the Global South.  We hear more and more commitments and pledges but we need rapid, just and equitable energy transformation now.”

NOTES