FOR IMMEDIATE RELEASE
September 6, 2023
- Nicole Rodel, Oil Change International – firstname.lastname@example.org (CET)
- Valentina Stackl, Oil Change International – email@example.com (ET)
REVEALED: Taxpayer-funded fossil fuel projects from the U.S., Germany, and Italy breach international climate commitments
Despite promises to end fossil fuel finance, countries contribute USD 4.4 billion this year alone
- Rich countries have continued to approve USD 4.4 billion in international public finance despite committing to end this support by the end of 2022;
- Six countries including the United States, Germany, Italy and Japan have at least 26 fossil fuel projects awaiting approvals, with Germany having the biggest number of projects pending;
- The U.S has approved the most fossil fuel finance in 2023 so far with $1.5 billion approved for four projects, followed by Italy, ($1.2 billion for 3 projects), Japan, ($449 million for 3 projects) and then Germany ($472 million for 3 projects);
- Controversial projects such as Papua LNG unlikely to go ahead without public finance.
Two weeks before global leaders gather for the UN Climate Ambition Summit in New York, new analysis by Oil Change International shows that several major countries continue to pump billions in public finance into international fossil fuel projects. Without this funding, these projects, which are incompatible with limiting global warming to 1.5°C, are unlikely to proceed.
At the 2021 COP26 UN climate summit in Glasgow, 39 countries and institutions – including many EU states, the United States, and Canada – signed the Glasgow Statement (officially called the Clean Energy Transition Partnership), committing to end direct international public finance for fossil fuel projects by the end of 2022. Previous research shows that it is already shifting an estimated $5.7 billion per year out of fossil fuels and into clean energy, with the potential of a further $13.7 billion per year if all Glasgow Statement signatories fulfill their commitments.
The new Fossil Finance Violations project tracker shows that the majority of the 16 large international public finance providers that signed the Glasgow Statement have kept their promise and not financed fossil fuels since the deadline elapsed (Belgium, Canada, Denmark, France, New Zealand, Portugal, Sweden, Spain and the United Kingdom). However, several major countries are continuing to finance fossil fuel projects in breach of the commitment.
Oil Change International also updated its regularly-published Leaders & Laggards briefing which tracks the policies of signatory countries, updating it with Germany’s new fossil fuel finance policy, which falls short of the Glasgow Statement.
The main countries continuing to finance fossil fuel projects despite committing to stop doing so include:
- The U.S. has approved the most fossil fuel finance in 2023 so far, providing a total of $1.5 billion for 4 projects. While the U.S. has reportedly adopted a policy to follow through on its commitments to end international public finance for fossil fuels, it is refusing to publish it. The Biden Administration has been heavily criticized for continuing to greenlight international fossil fuel projects, despite a 2021 Executive Order and its support for the Glasgow Statement.
- Germany, which has the most fossil fuel projects awaiting approval of public finance support with at least 9 under consideration. The country has approved $472 million in finance for 3 projects so far in 2023, and has a pre-request for liquefied natural gas (LNG) deliveries from the U.S. worth $3 billion. Germany recently published a new draft policy for consultation to restrict fossil financing that is vaguely-worded and falls short of its Glasgow promise.
- Italy, which has approved almost $1.2 billion in finance for 3 projects so far this year, making it the second-largest Glasgow signatory for approving fossil finance. Its fossil finance policy released early this year is considered by campaigners to be ‘worst-in-class’.
Because finance from governments plays a key role in shaping energy systems, signaling government priorities, providing concessional finance and shouldering risk, many fossil fuel projects would not go ahead without public finance.
Some of the controversial approved projects include the Talara Oil Refinery in Peru, which received $141 million from Italy’s export credit agency SACE, and the Unique Meghnaghat Gas Power Plant in Bangladesh, which received $45 million from Germany. Frontline communities in Peru and Bangladesh have spoken out in opposition to the projects.
The analysis also highlights the $13 billion Papua Liquefied Natural Gas (LNG) Project as pending approval for funding from the US Export-Import Bank (US EXIM). The Papua project could have lifetime emissions equivalent to the annual emissions of Bangladesh’s 169 million people. Communities in Papua New Guinea are speaking out against the project and calling on the Biden Administration not to fund the project.
Claire O’Manique, Public Finance Analyst at Oil Change International, said: “The US, Italy, and Germany are going rogue by backtracking on their commitment to end international public finance for fossil fuels. Public money that should be going to support a just transition to renewable energy is instead being pumped into more climate-wrecking fossil fuel projects, harming communities.”
“Other countries have kept their promise to end international public finance for fossil fuels. This is already shifting billions of dollars towards clean energy. There needs to be accountability for signatories who go back on their word.”
Peter Bosip, Executive Director for the Centre for Environmental Law and Community Rights (CELCOR), said: “The people of Papua New Guinea are already facing the full force of climate change. Rising sea levels, extreme weather events, and environmental degradation are already threatening many people’s existence and threatening our way of life. Papua LNG will add to and exacerbate this climate crisis – and financiers cannot, and should not, finance it.”
Anabela Lemos, Director of Justiça Ambiental, Mozambique, said: “Rich countries are addicted to fossil fuels. Less than 2 years since these pledges were announced, countries like Italy, USA and others are already backtracking and financing more fossil fuel projects. We denounce these moves. If there isn’t a strong backlash, the rest will follow soon and then there will be no chance for vulnerable countries like Mozambique to deal with the ravages of the climate crisis. Instead of supporting Mozambique to develop clean and just energy sources, these countries are pushing Mozambique down a fossil fuel development pathway. Italy and SACE are among those involved in the gas rush in northern Mozambique which has led to human rights abuses, devastated lives, increased conflict and militarisation, and oppression of communities, journalists and civil society.”
John Beard, founder, president, and executive director of the Port Arthur Community Action Network, said: “By investing in Port Arthur LNG, Germany is investing in yet another destructive project in a community that is already overwhelmed by the deadly and toxic pollution of the fossil fuel industry. While the industry and shareholders will get rich, Port Arthur LNG will heap more destruction upon a predominantly black and brown community already facing cancer rates over two times higher average. Our relatives and friends are dying daily from heart, lung and kidney diseases caused by industrial pollution. But the people of the Gulf are fighting back!”
“Enough is Enough! No more sacrifice zones, no more fossil fuels – we refuse to be sacrificed! We will keep fighting to accelerate the transition to clean green renewables. We ask our friends in Germany to stand with us against fossil fuels.”
- The Glasgow Statement / Clean Energy Transition Partnership was launched at the 2021 UN COP26 climate conference 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.”
- This implementation tracker outlines country-level progress on implementation of the Glasgow Statement, which will be regularly updated in the lead up to and during COP28.
- Oil Change International’s Public Finance for Energy Database shows that G20 countries and the major multilateral development banks (MDBs) provided at least $55 billion per year in international public finance for oil, gas, and coal projects between 2019 and 2021, almost 2 times more than their support for renewable energy over the same period ($29 billion).
- The IPCC’s AR6 report highlights 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.