29 countries and institutions, including the United States, Canada, Mali and Costa Rica, have joined a United Kingdom-led commitment to end direct international public finance for unabated coal, oil and gas by the end of 2022 and instead prioritize a clean energy transition. After a wave of commitments to end international coal finance, this is the first international political commitment that also addresses public finance for oil and gas.
Since the initial announcement on November 4th, the initiative has snowballed, with the Netherlands, El Salvador and Germany signing on this week. Together the signatories represent at least US$21.7 billion a year in influential and often preferential public finance for fossil fuels for 2018-2020. This is a massive portion of the $63b a year in known G20 and Multilateral Development Bank (MDB) finance for fossil fuels.
Shifting public finance for energy out of all fossil fuels and into clean energy is an urgent task. The International Energy Agency (IEA) says that to limit global warming to 1.5°C, this year needs to mark the end of new investments in not just coal, but also new oil and gas supply. Yet, G20 and MDB public finance for fossil fuels is currently 2.5 times their support for renewable energy, which averages $26b per year. Public finance for clean energy has stagnated, despite the need for it to grow exponentially to meet climate goals and ensure universal access to clean energy.
The joint statement, which was welcomed by CSOs, unites some of the largest historic providers of public finance for fossil fuels. However, other large financiers have yet to join. Laggards include Japan ($0.9b/yr), Korea ($10.6b/yr), and China ($7.6b/yr), which are the largest providers of international public fossil fuel finance in the G20 and together account for 46% of G20 and MDB finance for fossil fuels. France, Spain, and major MDBs like the World Bank and the European Bank for Reconstruction and Development (EBRD) are also missing. The combination of big polluters and low-income countries signing the statement challenges the assumption that developing country signatories want or need investments in fossil fuels to achieve their development objectives. Alongside fulfilling their stated goal of “prioriti[zing] support fully towards the clean energy transition”, campaigners remind signatories that the ability of this initiative to support a just and 1.5°C-aligned global energy transition will also hinge on avoiding loopholes allowing for a dash for gas, acting on debt relief, increasing grant-based climate finance, and securing a growing number of signatories to the statement. This welcome and nearly-unprecedented international action on oil and gas must now be combined with big polluters cleaning up their acts at home too. Carbon doesn’t care about borders, so this means signatories like the US, Canada, UK, Germany, the Netherlands, New Zealand, and Italy must take the obvious next steps: end domestic subsidies for fossil fuels and sign up to join the Beyond Oil and Gas Alliance to pursue a managed and just transition away from production.