FOR IMMEDIATE RELEASE
November 23, 2021
New research: E3F countries need to shift their EUR 20 billion in export finance for fossil fuels to renewables
THE HAGUE — This Wednesday the Export Finance for Future (E3F) Coalition — Denmark, France, Germany, the Netherlands, Spain, Sweden and the United Kingdom — is gathering for a virtual ministerial to discuss how to align their export finance with climate goals. A policy brief released today by Oil Change International and Overseas Development Institute shows that despite their commitment to align financial flows with climate goals under the Paris Agreement adopted in 2015, the E3F countries still provided €20 billion in export finance for fossil fuel projects abroad between 2018 and 2020. This was significantly higher than their support for clean energy projects (€17 billion).
The largest providers of fossil fuel financing were Spain, Germany and the UK, providing €6.2, €5 and €3.7 billion between 2018 and 2020, followed by the Netherlands and France, which provided €3.2 billion and €885 million during the same period. Denmark and Sweden have provided the highest levels of clean energy finance, at €6.6 and €6.7 billion between 2018 and 2020.
The E3F coalition formed in Spring of this year to “align export finance with climate objectives,” but set only far-off targets for ending fossil fuel finance. However, earlier this month at the global climate conference in Glasgow all E3F members signed up to a joint commitment with 39 countries and institutions to end public finance for fossil fuels by the end of 2022 and instead prioritize public finance for clean energy. Today’s policy brief shows that to meet this commitment, the E3F members will need to take urgent action to break their historic trend of propping up fossil fuel projects with public money.
The brief sums up the evidence that shows that this shift is not only necessary to meet climate targets, but is also in the interest of energy access, the protection of health and human rights and the objectives to create decent jobs and industries needed for sustainable development and resilient economies. It also emphasizes that to meet climate goals, financing for all fossil fuel projects needs to end, including gas projects. The authors say that while continued support for LPG for cooking or heating and fossil fuel generators in emergency response settings can be necessary, expanding long-lived gas infrastructure, such as gas-fired power plants or Liquid Natural Gas (LNG) infrastructure, is incompatible with keeping warming to 1.5°C, while alternatives are available and either already cheaper or are expected to be so within a few years.
The E3F countries say they want to finance the future, not the past. The brief therefore recommends the E3F countries to not wait until the end of 2022 to fulfill their Glasgow commitment and to agree to put an immediate halt to new fossil fuel finance on Wednesday. The authors also recommend the E3F countries to adopt a clear roadmap to implement their commitments to shift export finance out of fossil fuels and into clean energy with integrity and without loopholes. The E3F countries also have an opportunity to lead efforts to ingrain their commitments in existing multilateral policy processes, such as by the adoption of oil and gas export finance restrictions at the OECD. This is a necessary step to get laggard countries, such as Japan, Korea, China and Australia, to follow suit.
Laurie van der Burg, Global Public Finance Campaign Co-Manager at Oil Change International said:
“Thanks to significant public pressure all Export Finance for Future countries eventually committed to stop financing the past in Glasgow. We now need to see that these countries make true their commitment to stop export finance for fossil fuel projects and shift this money to clean energy projects. The science compels them to do so without delay, instead of in a year from now. We also want to see a concrete E3F plan for cementing the commitments made in Glasgow in existing multilateral policy processes, such as at the OECD, so that laggard countries, including Korea, Japan,China and Australia, are compelled to follow suit.”
Nandini Sharma, Senior Research Officer at the Overseas Development Institute said:
“The findings of our brief show that, in following through on their recent commitments, Export Finance for Future countries have to make a major transformation by shifting significant levels of financing away from fossil fuels. There are encouraging signs with Sweden and Denmark already providing higher levels of financing for clean energy, but others must follow suit in channeling their support away from fossil fuels towards renewables, and setting an example for others.”
- At COP26 in Glasgow 39 countries and institutions launched a joint statement on ending public finance for fossil fuels by the end of 2022 and instead prioritizing public finance for clean energy.
- The countries and the institutions that have signed the joint statement include: Agence Française de Développement (AFD), Albania, Canada, Costa Rica, Denmark, Banco de Desenvolvimento de Minas Gerais (BDMG), The East African Development Bank (EADB), El Salvador, Ethiopia, Fiji, Finland, Financierings-Maatschappij voor Ontwikkelingslanden N.V. (FMO), France, Germany, Mali, Marshall Islands, New Zealand, Moldova, Portugal, Slovenia, South Sudan, Spain, Sri Lanka, Switzerland, the European Investment Bank, The Gambia, The United Kingdom, The United States and Zambia.
- The estimate of a direct $24.1 billion shift is based on annual average international public finance for fossil fuels from the participating countries and institutions from 2016-2020. Data for Germany, Italy, AFD, Canada, EIB, the United Kingdom and the United States are from Oil Change International’s Shift the Subsidies Database. Data for Denmark, Finland and Sweden is taken directly from government reporting. No data was available for other donor signatories. Due to incomplete reporting, this is likely an underestimate.
- “Past Last Call” is OCI and Friends of the Earth US’s latest briefing analyzing G20 public finance figures and trends. It shows that between 2018 and 2020 G20 governments and public finance institutions provided at least USD 188 billion in public finance for fossil fuels.
- In September 2021, 200+ CSOs launched a statement calling on world leaders to end public finance for fossil fuels in 2021 and launch a joint commitment to do so at COP26.
- In June 2021, 100+ Economists called on the G7 to put an end to not only coal finance, but also oil and gas finance in 2021.
- 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.
- In October in the lead up to COP26, a global group of campaigners organized Climate Debt Justice Days of Action calling on governments and lenders to take decisive action to address the debt problem in the global south and to provide grants, not loans in order to free up resources to enable countries to respond to the climate crisis.