South Korea and Turkey block landmark OECD deal to end fossil fuel subsidies

OECD members have failed to pass a landmark deal to end over $40 billion in public subsidies to fossil fuels. Despite last-ditch attempts by senior government and international figures to sway South Korea and Turkey – the only countries blocking the deal – negotiators could not agree on a proposal to restrict export finance to fossil fuels. They will instead focus on a range of measures to improve transparency in export financing.

“Most negotiating countries have rallied behind this historic proposal, but South Korea and Turkey are blocking a deal. Even at this late stage, countries shouldn’t give up – this is their last chance to get around the table and lock in a landmark deal to end export finance for fossil fuels before Trump takes office. We cannot afford another penny for fossil fuel expansion if we want to preserve a liveable planet. Transparency measures are not good enough,” said Adam McGibbon, Campaign Strategist at Oil Change International.

In recent weeks, negotiators have tried to reach an agreement to end export credit agencies’ support for fossil fuels. Each year, OECD export credit agencies provide $41 billion to fossil fuels, almost five times their support to clean energy. This is the largest flow of international public finance to fossil fuels – larger than flows from Multilateral Development Banks. Shifting this finance to clean energy would be historic, and could catalyse the global clean energy transition.

Last year the UK, Canada and EU tabled a proposal at the OECD to end export finance for all fossil fuels, building on a 2021 OECD agreement that ended export finance support for coal plants. In a surprise move, the US recently switched its position at COP29 and came out in support of the proposal, leaving just a handful of countries blocking it. 

Talks came to a head this week, with countries trying to finalise a ‘Trump-proof’ deal before the new President comes into office. An OECD deal would be difficult if not impossible for Trump to undo, and further progress in these negotiations is very unlikely when he is in office. The negotiating parties who supported a deal included the European Union, United States, Canada, the United Kingdom, Norway, Australia and New Zealand. Because consensus is required and the Korean and Turkish governments have not been prepared to compromise, sources suggest that no agreement will be reached before the end of the year.

These negotiations built on previous efforts to restrict international public finance for fossil fuels, which have been successful in bringing down such support by $15 billion a year, a drop of two thirds. An OECD deal would accelerate this trend and ensure laggard countries follow suit.

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