Response to new U.S. guidance that could end billions in public finance for oil, gas, and coal
“Any credible analysis of alternatives and alignment with the Paris Agreement would prevent new fossil fuel projects from being financed,” said Tucker.
FOR IMMEDIATE RELEASE
December 10, 2021
Contact:
Collin Rees, collin@priceofoil.org
Bronwen Tucker, bronwen@priceofoil.org
Oil Change International responds to new U.S. guidance for international energy engagements, which could end billions in public finance for oil, gas, and coal
WASHINGTON, DC — Today, news circulated that the U.S. government has issued new interim guidance to all agencies and embassies for international energy engagements. This guidance applies to all international engagements across the U.S. government, including financing from the U.S. Export-Import Bank and the U.S. International Development Finance Corporation. The guidance builds on past coal exclusions to rule out most international public finance for unabated oil and gas projects across the supply chain. It contains some still-unclear exemptions for national security as well as energy access and development in low-income and climate-vulnerable countries.
In response, Oil Change International experts released the following statements:
Bronwen Tucker, Global Public Finance Campaign Co-Manager:
“To win a globally just energy transition and avoid the worst climate impacts, we can’t afford any finance for new fossil fuel projects, much less concessional, government-backed finance. Today’s guidance could stop the U.S. from continuing billions of dollars in annual support for oil and gas, and set an important international example given that many of its peers just pledged to do the same at COP26.
“Details matter and we are still missing some fine print. If the exemptions are implemented in good faith, this guidance would end almost all U.S. international finance for fossil fuels. This is because any credible analysis of alternatives and alignment with the Paris Agreement would prevent new fossil fuel projects from being financed. But there’s still a real risk of it being poorly interpreted, which means up to 61% ($6.9 billion) of U.S. international fossil fuel support since the Paris Agreement could continue. We also still need to see the Biden Administration be much more ambitious and specific on how the U.S. will provide its fair share of climate finance, debt forgiveness, and renewable energy funding abroad.”
Collin Rees, United States Program Manager:
“This new guidance is encouraging and shows the Biden administration is taking seriously the joint commitment it signed onto at COP26 to end international support for fossil fuels. The U.S. has spent over $11 billion in public money on overseas oil, gas, and coal projects since the Paris Agreement was signed — money that has been used to lock in more emissions, extract and burn more fossil fuels, and violate the rights of communities.
“If this guidance is implemented well and loopholes are minimized, this is a major step forward to align our overseas spending with climate goals. Other countries should follow suit, particularly the world’s largest providers of overseas oil and gas finance, including Canada, South Korea, Japan, and China. It’s also critical for Joe Biden to implement this guidance at home and end our billions in domestic subsidies for fossil fuels, as well as stop deadly fossil fuel projects under his control like the Line 3 and Dakota Access pipelines.”
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Notes for Editors
– New research from Oil Change International and Friends of the Earth U.S. found the U.S. has supported fossil fuel projects with at least $11.3 billion since the Paris Agreement was signed, at least $8.8 billion (78%) of which went to overseas gas projects: https://oilchange.org/2021/10/28/past-last-call-g20-public-finance-institutions-are-still-bankrolling-fossil-fuels. This also includes a comparison chart of other G20 and MDB country fossil fuel exclusion policies for public finance (updated prior to COP26).
– The diplomatic cable announcing this interim guidance can be found here: http://oilchange.org/wp-content/uploads/2021/12/US-Fossil-Fuel-Guidance-December-2021.pdf. The guidance rules out support for unabated and partially abated coal, and for other carbon-intensive projects (including oil and gas) associated with a life-cycle intensity above 250 grams of CO2 per kilowatt-hour (kWh). It states that this will apply to projects across the full energy supply chain and associated with more than USD $250,000 in support. There are some further exemptions for U.S. national security interests, energy access, and development.
– Oil Change International’s Shift the Subsidies database also shows that the U.S. provided $6.9 billion in fossil fuel support to International Development Association (IDA) eligible and IDA-blend countries, fragile and conflicted states, and small island developing states in 2016 to 2020, amounting to 61% of overall international fossil fuel finance from the agencies covered by this policy. As there are further exemptions for energy access and development in the guidance for these countries, this is the amount of finance could continue if alternatives assessments and other screening are not applied well.
– At COP26, the United States joined 34 other countries and five development finance institutions in committing to “end new direct public support for the international unabated fossil fuel energy sector by the end of 2022” — this guidance is part of the implementation of that commitment: https://ukcop26.org/statement-on-international-public-support-for-the-clean-energy-transition