FOR IMMEDIATE RELEASE
April 5, 2023
Nicole Rodel, Oil Change International: email@example.com
G20 public money enabled 82% of LNG export infrastructure expansion, breaking climate promises
- Government-backed LNG projects are exposing the public to stranded asset risks and causing emissions nearly twice the annual emissions of Canada
- Public finance is playing a key role in the expansion of fossil fuel infrastructure that will put global climate targets and a liveable future out of reach
- G7 host Japan is the biggest LNG financier in the world; with China, Korea, and the US also among biggest public financiers of new LNG export capacity
- Campaigners urge G7 host Japan to live up to pledge to end public finance for fossil fuels made last year
5 April 2023 – A new briefing from Oil Change International shows G20 government institutions were involved in financing 82% of new Liquefied Natural Gas (LNG) export terminal capacity built from 2012-2022, providing at least USD 78 billion in loans, guarantees, and equity investments for new LNG export terminal capacity projects. The loan portion of this alone made up 24% of all capital investment in new LNG export terminals during this period.
The briefing also reveals that:
- Japan, China, Korea, and the US are the biggest public financiers of new LNG export capacity.
- These publicly-backed projects are causing 928 megatonnes of CO? equivalent per year, nearly twice the annual emissions of Canada.
- Government support is continuing to enable future LNG expansion. At the start of 2023, 83% of under-development LNG export terminal capacity expected to be completed by 2026 has public finance backing, amounting to USD 33 billion in financing. If completed, these new projects will drive the addition of a further 654 megatonnes of CO? equivalent each year.
These findings bolster previous research showing that international public finance has played an outsized role in getting major fossil fuel infrastructure like LNG export terminals built. Government backing and below-market terms help make these risky ‘cornerstone’ projects bankable, enabling gas expansion across the supply chain – while also making it harder for clean energy projects to get built.
According to the International Energy Agency (IEA) there is no room for new LNG infrastructure in a world that maintains a 50% chance to limit global warming to 1.5C. Yet, the briefing shows that major world governments continue to enable new and controversial ventures like the Mozambique LNG project.
As the G7 climate, energy and environment ministers prepare to meet in Japan next week ahead of May’s G7 Summit, campaigners are urging governments to end international public finance for fossil fuels. At COP26, 39 countries and financial institutions signed the Glasgow Statement, committing to end international public finance for fossil fuels by the end of 2022. A near-identical commitment was adopted at last year’s G7, bringing Japan on board. However, this language was later weakened by G7 leaders who added that “investment in [LNG] is necessary”. While some signatories, including Canada, the United Kingdom and France, are making progress and are shifting an estimated USD 5.7 billion per year out of fossil fuels and into clean energy, other countries are lagging behind and have broken their promise (e.g. Italy) or are at risk of doing so (Germany and Japan). Japan, for example, signaled last year that it does not plan to end upstream oil and gas finance despite the G7 pledge.
The International Energy Agency (IEA) has repeatedly stated that clean energy, not fossil fuels, are the solution for energy affordability, security and climate and development goals. Unless countries meet and expand their commitments to end international public finance for fossil fuels in 2023, climate, development and security goals will be pushed further beyond reach.
Adam McGibbon, Public Finance Strategist at Oil Change International:
“These shocking figures show that laggard countries need to catch up with leading governments and urgently change course to stop pumping taxpayer’s money into gas projects that are wrecking our climate, leave the energy crisis unsolved and will end up as stranded assets.
To meet their climate obligations, governments should stop funding LNG expansion. In addition, those countries that have not already done so should join the Glasgow Statement initiative to show they are serious about solving the climate and energy security crises. Anything less is just hot air.”
Makiko Arima, Japan Finance Campaigner at Oil Change International:
“Japan’s leadership in the expansion of LNG development is the exact opposite of what we need from the host of this year’s G7. Japan needs to take last year’s G7 commitment to end public finance for fossil fuels seriously and stop funding gas projects. There is no time for so-called transition fuels, when fossil fuel dependency is exacerbating the climate and energy crises, and fossil fuel projects are harming communities and the environment. G7 countries need to do much more than make climate commitments that they break.”
Anabela Lemos, Director of Justica Ambiental! / Friends of the Earth Mozambique:
“While northern countries, the culprits creating the climate crisis, benefit from this gas, it is Mozambique and other southern countries, like Pakistan and South Africa, who will suffer – Mozambique has been hit by four cyclones within three years that have displaced over 1 million people.
The gas industry in Mozambique is devastating the country’s climate, people, environment and economy. Even though gas has been produced in Mozambique for decades, still only 30% of people have electricity access and in Inhambane Province, where Sasol has been extracting gas for 20 years, displaced communities have seen no benefits.
Northern governments and their companies involved in the Mozambique LNG Project in Cabo Delgado Province are complicit in forcing the already debt-ridden country into a fossil fuel lock in, and pushing people into further poverty, by taking away their livelihoods and fueling a war that has created one million refugees.”
- The report uses data from Oil Change International’s Public Finance for Energy Database (energyfinance.org), which covers G20 export credit agencies (ECAs), G20 development finance institutions (DFIs), as well as the major multilateral development banks (MDBs). It does not include further government support for these projects from state-owned enterprises and direct government subsidies.
- International public finance is largely still behind fossil fuels despite the climate emergency. G20 country and multilateral development bank (MDB) international public finance for fossil fuels from 2019-2021 is at least USD 55 billion per year, almost twice the support provided for clean energy, which averaged only USD 29 billion per year.
- A legal opinion commissioned by Oil Change International in 2021 demonstrated that governments could be in violation of their international legal obligations if they do not take action to reduce their financing of fossil fuel-related activities imminently.
- The Glasgow Statement was launched at the UN climate talks in Glasgow (COP26). The 39 signatories 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.”
- At last year’s G7 a near-identical commitment was adopted, but with loopholes calling for continued investments in LNG.