FOR IMMEDIATE RELEASE
March 14, 2023
Contact:
- Nina Pusic, nina@priceofoil.org
OECD fails to make progress on aligning with 1.5°C, stalling urgent climate action for over 6 months
Last week, OECD countries failed to conclude negotiations on climate friendly incentives to align Export Credit Agencies, the world’s largest international financiers of fossil fuels, with international climate goals. They also neglected taking commitments to end oil and gas export finance forward.
Governed by the OECD, Export Credit Agencies (ECAs) provide more public finance for fossil fuel projects than any other type of public finance institution, including the Multilateral Development Banks. ECA finance for fossil fuels is over seven times more for fossil fuels (33.5 USD billion per year between 2019 and 2022) than it is for renewables (4.7 USD billion per year).
OECD countries have an opportunity to turn this around. In 2021, over 50% of OECD members agreed to end their international public finance for fossil fuels through signing the Clean Energy Transition Partnership. This includes a commitment to drive negotiations at the OECD on this topic. However, no OECD member has shown initiative to take the latter commitment forward as of yet.
The March OECD negotiations intended to reach a conclusion on an update to the Climate Change Sector Understanding (CCSU) to provide more favorable incentives to “climate friendly” projects. These were meant to be finalized last November and in March the OECD has yet again failed to reach an agreement on the updated CCSU.
The data and science is clear, however, that favorable incentives for “climate friendly” investments in and by itself would be insufficient to align the OECD Arrangement with the Paris Agreement target of 1.5°C warming. In addition to increasing clean energy finance, this requires ending finance for oil and gas, on top of the already adopted prohibition on finance for coal-fired power. According to the IEA, staying below 1.5C requires an end to investments in not only new coal, but also new oil and gas supply and LNG infrastructure.
With this in mind, a week ahead of the negotiations more than 175 civil society organizations (CSOs) from over 45 countries released a Joint Position that calls on OECD members to end their export finance for oil and gas, and explains how it can be done. They urge OECD members who consider themselves climate leaders to table a proposal for doing so at the next negotiators meeting in late spring this year.
Quotes:
Nina Puši?, Export Finance Climate Strategist at Oil Change International, said:
“To limit global warming to 1.5°C, OECD countries should not just scale up clean energy investments, they should also stop throwing fuel on the fire by spending billions on new fossil fuel projects that are incompatible with climate goals. The world cannot afford another wasted minute – the OECD must stop procrastinating and start showing ambitious action. ”
Samuel Okulony, Environmental Governance Institute, Uganda, stated:
“Climate change is not only an environmental issue but a human rights issue as well. The global south is disproportionately impacted by climate change, yet the OECD’s ECAs are failing to address this emergency. It’s high time for them to demonstrate leadership by limiting export support for fossil fuels and embracing a just energy transition.”
Kate DeAngelis, Friends of the Earth United States, said:
“The OECD Export Credit Agencies has once again failed to make progress on addressing the devastating impacts of climate change. These export credit agencies would be better to turn their attention to restricting their oil and gas financing with urgency. Then they could claim true leadership in turning the world on the right path toward a just energy transition.”
Louise Burrows, E3G, United Kingdom, stated:
“Future prosperity lies in the clean transition. It is critical that export credit agencies rapidly get behind supporting sectors and technologies of the future, not the past. Whilst these delays are concerning, ECAs still have an opportunity to prioritise securing an agreement on restricting international support for fossil fuels. In particular, signatories of the Glasgow Statement must fulfill their commitment of driving ambition on this agenda at the OECD.”
Antonio Tricarico, ReCommon, Italy, said:
“It is very telling that OECD countries are not able to find an agreement on what should be the role of export credit agencies in the energy transition. It is evident the contradiction that these agencies remain the main public financiers of fossil fuel expansion worldwide, which is against climate science and any recommendation from the IEA. It would be wiser for the OECD to urgently go back to the drawing board and prioritize an agreement on key restrictions for ECA financing to fossil fuels in line with the Glasgow Statement on direct international public finance for the fossil fuel sector. The credibility of the entire institution is at stake in a crucial moment for the fight against climate change”.
Julia Gerlo, FARN, Argentina, stated:
“OECD export credit agencies must stop making excuses to delay the energy transition. ECA finances gas & oil projects that accentuate an extractive profile and generate high socio-environmental conflict in countries of the Global South, such as oil and gas extraction through fracking in Vaca Muerta, Argentina. There is no time for the ECAs to continue to delay clear commitments and responsibilities in line with the Glasgow Statements, while Global South countries are suffering disproportionate impacts of climate change.”