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New report: Commitment to end international finance for fossil fuels is shifting billions, but key countries breaking promises missing in action

Promise Breakers, a report released today by Oil Change International, reveals that the stop funding fossils commitment forged at COP26, is already shifting an estimated USD 5.7 billion per year out of fossil fuels and into clean energy, with the potential of a further 13.7 billion per year if all signatories fulfill their commitments.

FOR IMMEDIATE RELEASE

Contact:

Nicole Rodel – nicole[at]priceofoil.org / +27842570627 (SAST)
Adam McGibbon – adam.mcgibbon[at]priceofoil.org / +447809368481 (GMT)
Bronwen Tucker – bronwen[at]priceofoil.org / +1-587-926-7601 (ET)

New report: Commitment to end international finance for fossil fuels is shifting billions, but key countries breaking promises 

  • New research shows Glasgow Statement commitment forged at the 2021 UN climate summit is already shifting an estimated USD 5.7 billion per year out of fossil fuels and into clean energy
  • The report is the first assessment after the end-of-2022 deadline showing which countries have kept their Glasgow promises, with Germany, Italy, and the United States among the major promise breakers
  • If all Glasgow Statement signatories fulfill their commitments, then a further 13.7 billion per year will be shifted out of fossil fuels and into clean energy

    15 March 2023 – Promise Breakers, a report released today by Oil Change International, reveals that the Glasgow Statement, a joint commitment forged at the 2021 UN climate summit (COP26), is already shifting an estimated USD 5.7 billion per year out of fossil fuels and into clean energy, with the potential of a further 13.7 billion per year if all Glasgow Statement signatories fulfill their commitments.

    At COP26 in Glasgow, 39 countries and institutions pledged to end international public finance for fossil fuels by the end of 2022 and shift this money to clean energy. This report is the first international assessment of signatories’ implementation of the commitment since the passing of the end of 2022 deadline.

    The report reveals that while some high-income countries have kept their Glasgow commitment, a group of major providers of international public finance have broken their promise, including Germany, Italy, and the United States. 

    The report’s key findings include that out of sixteen high-income signatories that provide significant levels of international public finance:

  • Eight have adopted policies that broadly meet the promise they made in Glasgow (Canada, the European Investment Bank, the United Kingdom, France, Finland, Sweden, Denmark, and New Zealand), shifting an estimated USD 5.7 billion per year out of fossil fuels and showing that the Glasgow Statement is having a real-world impact;
  • Four signatories (Belgium, Switzerland, the Netherlands, and Spain) have new policies that further restrict fossil fuel support but leave major loopholes and/or do not meet the end of 2022 deadline; 
  • Four signatories (Germany, Italy, Portugal, and the United States) have yet to publish new or updated policies. The United States has reportedly adopted a policy, but is refusing to publish it. Ongoing policy debates in Germany and Italy suggest that these countries are likely to introduce loopholes in any forthcoming policies that allow continued fossil fuel financing;
  • Just days after this report was finalized, it appears Canada’s export credit agency, Export Development Canada is already in breach of their policy by approving four international oil and gas transactions totaling at least USD 5.5 million in 2023.

    The report contains a detailed report card on each signatories’ policies, with recommendations for improvement. It highlights key opportunities for signatories to increase their clean energy finance levels, work together to reiterate and strengthen their commitment to end international finance for fossil fuels at the Japan-led G7 in May and negotiate oil and gas export finance restrictions at the OECD.

    The International Energy Agency (IEA) has repeatedly stated that clean energy, not fossil fuels, are the solution for energy affordability, security and climate and development goals. Unless countries meet and expand their commitments to end international public finance for fossil fuels in 2023, climate, development and security goals will be pushed further beyond reach.

    Previous Oil Change International research shows that international public finance still heavily favors fossil fuels. Oil Change International’s Public Finance for Energy Database shows that from 2016 – the year after the Paris Agreement was signed – until 2021, USD 422 billion in international public finance has gone to fossil fuels compared to just USD 173 billion for clean energy.

    Adam McGibbon, a lead author and Public Finance Strategist at Oil Change International, said:  “Our research shows that while the Glasgow Statement is a success story that’s having a real-world impact in shifting finance away from fossil fuels, some countries like the US, Germany and Italy have broken their promise.

    These countries must immediately implement policies to keep the promise they made in Glasgow, phasing out international public finance for fossil fuels, or face growing international scrutiny as promise-breakers on climate policy.”

    Regine Richter, Senior Energy and Finance campaigner at Urgewald said: “Continuously supporting the fossil fuel industry with public money will obstruct the ecological transition that Chancellor Scholz otherwise declares as most important for the country. He needs to choose his camp: promoting the transition or hampering it.” 

    Kate DeAngelis, International Finance Program Manager at Friends of the Earth U.S., said: “The United States has long claimed to be a world leader in climate action, yet fails to back this up with meaningful action or policy. U.S. agencies like the U.S. Export-Import Bank and U.S. International Development Finance Corporation continue to be piggy banks for fossil fuel projects from Mexico to South Africa to Indonesia, as these nations suffer from climate change.

    President Biden must make his administration’s policy public, which would catalyze other countries to stop providing billions of dollars to polluting projects all over the world. True leaders do not blink when faced with a global climate crisis.”

    Simone Ogno, Climate and Finance campaigner at ReCommon, said: “Italy is already three months late for implementing the Glasgow Statement. Through its export credit agency SACE, Italy has become the 1st European fossil fuel financier, enabling the development of strategic oil & gas projects for the Russian Federation, not to mention LNG projects in Mozambique and oil refineries in Egypt.

    On top of that, we’re forced to endure SACE chairing even the OECD Working Party on Export Credit and Credit Guarantees, the entity entitled to discuss the restrictions on export credit support for oil & gas. The time has come for Italy and SACE to end this tragic record once and for all.”

    Constantin Zerger, Head of Energy and Climate Protection at the Deutsche Umwelthilfe, said:  “Instead of providing gigantic sums of public funds for fossil fuel projects that are incompatible with the Paris Agreement, we urge German Chancellor Olaf Scholz to ensure that the Kreditanstalt für Wiederaufbau adheres to the Glasgow Statement. The government-owned development bank needs to officially commit that it will end its support for financial fossil fuel projects abroad and in Germany. Chancellor Scholz, it is time to become a real climate leader!”

    Notes:

  • In addition to the authoring organizations, the report has also been endorsed by 49 other organizations from across the world.
  • The Glasgow Statement was launched at the UN climate talks in Glasgow (COP26). The 39 signatories aim 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 Glasgow Statement has 39 signatories. This includes 19 high-income countries (Belgium, Canada, Denmark, Finland, France, Germany, Republic of Ireland, The Holy See [Vatican City State], Iceland, Italy, the Netherlands, New Zealand, Portugal, Slovenia, Spain, Sweden, Switzerland, United Kingdom, United States), 15 low- and middle-income countries (Albania, Burkina Faso, Costa Rica, El Salvador, Ethiopia, Fiji, Gabon, The Gambia, Jordan, Mali, Marshall Islands, Moldova, South Sudan, Sri Lanka, Zambia), and 5 public finance institutions (Agence Française de Développement [AFD], Banco de Desenvolvimento de Minas Gerais, the East African Development Bank, the European Investment Bank [EIB], and Financierings-Maatschappij voor Ontwikkelingslanden N.V. [FMO])
  • In its latest report, the IPCC highlighted public finance for fossil fuels as ‘severely misaligned’ with reaching the Paris goals, but that if shifted, it would 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. 
  • A legal opinion by Professor Jorge E Viñuales from the University of Cambridge and Barrister Kate Cook of Matrix Chambers argues that governments and public finance institutions that continue to finance fossil fuel infrastructure are potentially at risk of climate litigation.
  • The report urges signatories to table and back a proposal for oil and gas export finance restrictions at the OECD as soon as possible. A proposal to end export finance support for oil and gas has been endorsed by over 175 organizations.

    Oil Change International is a research, communication, and advocacy organization focused on exposing the true costs of fossil fuels and facilitating the coming transition towards clean energy.