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France makes good on commitment to end fossil fuel finance as Cop26 deadline nears

The French government has called time on public finance for fossil fuels, delivering on a pledge it made at the UN Climate Conference in Glasgow last year along with 38 other countries and financial institutions.

The European country’s 2023 budget bill presented this week says that from January next year its export credit agency, BPIFrance, will no longer provide export guarantees on upstream or downstream fossil fuel projects.

The development follows a joint announcement made at the COP26 summit in November 2021 promising an end to direct support for international fossil fuel projects “except in limited and clearly defined circumstances that are consistent with a 1.5°C warming limit and the goals of the Paris Agreement”.

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The French Development Agency (AFD), which is also subject to the Glasgow commitment, had already adopted a near-complete fossil fuel exclusion in 2019.

The policy – which will be enacted in law through the French government’s budget – is a landmark win for French campaigners who have been calling for an end to French export finance for fossil fuel projects for years. In addition, it builds pressure on fellow Glasgow statement signatories to keep their promise and announce their Glasgow-compliant policies by the upcoming Cop27 UN Climate Conference in Egypt.

Aside from France, so far, Belgium, Denmark, Sweden and the United Kingdom have published policies to implement their Glasgow commitment. Countries with historically significant support for fossil fuels, such as Canada, Germany, Italy and the United States, have yet to do so.

The French policy ends BPIFrance’s support for the exploration, production, transport, storage, refining or distribution of oil and gas. Exceptions will be granted for support that would reduce negative environmental impacts, aid the dismantling or conversion of a facility, improve health or safety without increasing the lifespan or production capacity of a fossil fuel asset. Exceptions will also be granted for gas-fired and oil-fired power plants, if they can be proven to benefit the energy mix of a country.

If these criteria are implemented with integrity, in practice this should not lead to any new financing for oil or gas-fired power, as this is incompatible with 1.5°C and alternatives are available and affordable.

Reacting to the new policy, Adam McGibbon, public finance strategist at NGO Oil Change International, says: “[This] shows that France takes its commitment to end international finance for fossil fuels by the end of this year seriously and that other countries should do so too. Emmanuel Macron must now use France’s diplomatic power to ensure Germany and other countries also make good on their commitments by Cop27. These countries can say they are climate leaders, or they can keep funding fossil fuels overseas – but they can’t do both.”

Given the current energy crisis roiling Europe in the wake of Russia’s invasion of Ukraine, whether the remaining Glasgow statement signatories will meet the year-end deadline to publish their policies to phase out public finance for fossil fuels remains to be seen.

In June this year, Laurie van der Burg, public finance campaign co-manager at Oil Change International, told GTR that there were signs some countries were “backsliding” on their Cop26 commitments.

“The US is looking to finance liquefied natural gas (LNG) to replace Russian supply, and indicated it could use its export credit agency. Japan has been holding discussions with the US about investing in the US LNG sector. Germany’s chancellor Olaf Scholz visited Senegal recently and talked up investments in gas there, to offset lost Russian supplies,” she said.

Meanwhile, in August this year, Germany passed a law to bring back oil- and coal-fired power plants into the country’s energy mix in case of a critical gas supply situation.

Climate campaigners are now calling on France to not only encourage fellow Glasgow statement signatories to follow suit, but also advance this agenda at the Export Finance for Future Summit on 3 November.

The post France makes good on commitment to end fossil fuel finance as Cop26 deadline nears appeared first on Global Trade Review (GTR).

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