Contact: Adam McGibbon, adam.mcgibbon [at] priceofoil.org
Finland joins growing list of countries restricting international oil & gas finance, leaving Norway the only Nordic country not to do so
- Finland has released a new policy for Finnvera, the Finnish export credit agency, restricting public finance for oil and gas
- From 2018-20, Finnvera provided an average per year of USD 142 million to fossil fuels and only USD 46 million to clean energy – this will now change
- Policy shift puts pressure on Norway. It is the only Nordic country that did not join the Glasgow pledge to end international public finance for fossil fuels, a key outcome of the UN COP26 climate summit
- However, policy for FinnFund, the Finnish government’s development finance institution, still needs updating and ECA policy needs strengthening.
Finland has joined a growing list of countries making good on a key pledge from the UN COP26 climate summit in Glasgow last year, by releasing a new policy ending almost all support for fossil fuels via Finnvera, the Finnish Government’s export credit agency.
Analysis shows that from 2018-20, Finnvera provided an average per year of USD 142 million to fossil fuels and only USD 46 million to clean energy – or 76% of energy support to fossil fuels vs only 24% for clean energy. This new policy is likely to shift Finnvera’s focus to clean energy.
At the COP26 summit in November 2021, 39 countries and financial institutions, including Finland, signed the Glasgow Statement on International Public Support for the Clean Energy Transition, committing signatories to end their direct international public financing for fossil fuels by the end of 2022, except in exceptional circumstances, and fully prioritize their public finance for the clean energy transition. If all signatories follow through on their pledges with integrity, this will directly shift USD 28 billion a year from fossil fuels to clean energy and help shift even larger sums of public and private money away from investments in climate-harming fossil fuels.
Finnvera will no longer provide support for new oil and gas drilling or for extension of existing fields. Support for oil-fired power plants and gas-fired power plants will be allowed under certain circumstances, including a requirement that those plants are consistent with a 1.5°C global warming limit. In practice, if Finland’s 1.5°C requirement is implemented with integrity and good faith, this should mean that no new guarantees can be issued for such projects. The committed emissions from existing energy infrastructure already jeopardize the 1.5°C warming limit, meaning that there is no space for further expansion in fossil fuel power infrastructure and that some fossil fuel assets will need to be shut down before the end of their lifetime. The good news is that clean alternatives to fossil-fuel power generation exist, can support security of energy supply and often provide the cheapest option.
While Finnvera makes up virtually all of the country’s international public finance for fossil fuels in the 2018-20 period, in order to comply with the Glasgow Statement, the Finnish Government must update its fossil fuel policy for Finnfund, their development finance institution, similarly ending direct financing for fossil fuels in that institution too. Other countries such as the UK, Denmark, Sweden and France have already done this.
As a member of the Export Finance for Future (E3F) initiative, Finland must also use its diplomatic capital to ensure that all other E3F members implement the Glasgow Statement and present their updated policies at the upcoming E3F Summit on 3rd November.
Finland joins the UK, France, Denmark, Sweden and Belgium in publishing policies restricting fossil fuel finance to deliver on the COP26 commitment, building momentum ahead of the COP27 UN climate summit in Egypt next month. Countries that have yet to deliver on their promise to end fossil fuel finance include the USA, Canada, Germany, Italy and the Netherlands.
Vera Kauppinen, Campaign Specialist at Hiilivapaa Suomi (Friends of the Earth Finland), said,
“Finnvera ending its finance for almost all fossil fuels is a good step forward, and if Finnfund follows suit, should spell the end for Finland’s international public finance for fossil fuels. Now Norway must join the Glasgow Statement or risk getting left behind by its neighbours.”
Truls Gulowsen, Leader of Naturvernforbundet (Friends of the Earth Norway), said:
“It’s embarrassing that Norway is once again the odd-one-out when it comes to Nordic countries and meaningful action to halt the climate crisis. Norway desperately needs to start a just transition that supports climate and green jobs, but has instead given the petroleum industry huge tax advantages that have led to record numbers of new projects that suck resources and workers away from other, more sustainable sectors. The least Norway can do is to stop funding fossil fuel projects through international public finance, and instead use that money to support renewables and other green industries that can contribute to a transition in the oil and gas supply industry as well as the rest of the economy.”
Adam McGibbon, Public Finance Strategist at Oil Change International, said:
“Finland is on the way to fulfilling its commitment to end international finance for fossil fuels by the end of this year.
This leaves Norway as the only Nordic country that has not yet taken action to end its international public finance for fossil fuels. Norway has been a vocal advocate of climate action and development in international forums – but it’s getting left behind by its neighbors and jeopardizing its reputation by not signing up to the Glasgow pledge.
If the United States, Canada, the UK and every other Nordic country can fully shift their international public finance to clean energy, then Norway can too. Before COP27, Norway must announce it will join the Glasgow Statement and plan to end its international public finance for fossil fuels.”
- The Glasgow Statement was launched at the 26th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP 26) in Glasgow. The 39 signatories (full list here) 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.”
- Oil Change International has compiled this implementation tracker that outlines country-level progress on implementation of the Glasgow Statement, which will be regularly updated in the lead up to and during COP27.
- Oil Change International’s Public Finance for Energy Database shows that G20 countries and the major multilateral development banks (MDBs) provided at least USD 63 billion per year in international public finance for oil, gas, and coal projects between 2018 and 2020, 2.5 more than their support for renewable energy.
- 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 could 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.
- In May 2022, 122 civil society organizations sent letters to signatories to the Glasgow Statement calling on them to meet their commitment. Letters to Germany, Italy, Canada, France, the US, and other non-G7 countries can be found here.