FOR IMMEDIATE RELEASE
November 24, 2021
CSOs say E3F countries need to act with urgency and integrity to meet commitments to end export finance for fossil fuels
THE HAGUE — Today the Export Finance for Future (E3F) Coalition — Denmark, France, Germany, the Netherlands, Spain, Sweden and the United Kingdom — gathered for a virtual ministerial meeting to discuss how to align their export finance with climate goals. A policy brief released 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 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.
At today’s ministerial meeting, Belgium, Finland and Italy, that all already signed up to the Glasgow commitment, were added to the coalition. While countries agreed to work together on implementing their new commitments, details of how they would do so were not presented. It therefore remains unclear how the E3F countries interpret the Glasgow commitment exactly. Statements from some E3F countries, such as France speaking about a 2025 and 2035 phase-out timeline for upstream oil and gas, worry CSOs that those countries are not planning to meet the commitment to end such support by 2022 and will use broad and unhelpful interpretations of terms such as “unabated” and “limited and clearly defined exceptions” to continue financing fossil fuels and in particular gas projects.
The ODI and OCI policy brief 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 CSOs also hoped that the E3F countries today, as self-proclaimed leaders, would agree to put an immediate halt to new fossil fuel export finance instead of in a year from now, as is required according to climate science. This did not happen. Doing so would, according to the CSOs, put the E3F in a good position to lead efforts to cement 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.”
Isabelle Geuskens, Just Energy Transition Senior Officer, Milieudefensie:
“The time has come for ambitious E3F action, not just ambitious words. We do not want to see a year of vague compromises and exceptions that water the commitment down and lead to continued support fossil fuels, such as gas – as this not only puts the climate at risks, it also locks countries in the south into fossil dependence with all the economic risks that come along. This also regularly leads to human rights violations, as we have seen in Mozambique. Countries in the south, which face the biggest burden of the climate crisis, have a lot of renewable energy potential. They need to be supported in a renewable energy leap. This enhances their overall resilience and their sustainable development. It is the least we can do to repay our huge climate debt”
Niels Hazekamp, Senior policy adviser at Both ENDS said:
“The Glasgow-statement marked an important step for governments to urgently stop public support for fossil fuels. Today, E3F countries talked about next steps. All countries agreed that strong commitments are needed, but there was still a lot of talk about exceptions. Gas is not a transition fuel and limits the development of renewable energy projects. There is an opportunity for countries to make a very ambitious shift and create both climate and social benefits at the same time.”
Davide Maneschi, Programme Officer Climate Change at Swedwatch said:
“Initiatives like Export Finance for Future and the recent UK-led COP statement on phasing out public finance support for fossil fuels have great potential to contribute to a just, fair and equitable transition. But a just transition is a transition that is in line with achieving climate goals as informed by scientific research – and scientists tell us that we need to take immediate action to avoid dangerous climate change. Export credit agencies and governments now need to quickly revisit their export finance policies and align policies with scenarios compatible with the 1.5 °C temperature goal. High-level conferences on their own are not going to solve the climate crisis – what is needed is resolute and bold climate action.”
Anna-Lena Rebaud, Climate and Just Transition Campaigner at Friends of the Earth France said:
“By launching the E3F coalition, France proclaimed itself a leader in greening export finance. At the opening of COP26, President Emmanuel Macron stated that “leadership requires exemplarity”. Yet concerning export finance, France is far from meeting this standard! The representative of the French Ministry of Finance present at the E3F summit kept referring to the phase-out dates adopted by France last year (2025 for oil production and 2035 for gas production) as ambitious targets, when even the IEA says no new oil and gas fields developments are accepted under their net zero scenario. If the French government really wants to lead, it has to revise its policy next year and end all support to fossil fuels by the end of 2022.”
Simone Ogno, Finance and Climate Campaigner at ReCommon, Italy:
“It’s good news that Italy is joining the Export Finance for Future coalition. Unfortunately, it does so just days after issuing the public guarantee to the Arctic LNG-2 fossil gas mega-project and while that for the EACOP pipeline is under scrutiny. Italy, like all the other E3F members who signed the Glasgow-initiative, should set much more ambitious goals and immediately stop international public financing for fossil fuels projects, not at the end of 2022.”
- The statement adopted by the E3F countries today can be accessed through this link.
- Yesterday, the Overseas Development Institute and OCI published a policy brief “Export Finance for the Past or the Future” that gives an overview of E3F export finance for energy trends between 2018 and 2020 and provides recommendations for taking the commitments made in Glasgow forward.
- 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.