A commitment by dozens of countries and public institutions at the Cop26 summit to end international public finance for fossil fuels is already reaping climate rewards, but failures by major economies to keep their promises are stymieing the full benefits, a new report says.
Oil Change International, a NGO that campaigns for an end to public financing for polluting energy sources, says that the US, Germany, Italy and Portugal, signatories to the 2021 Cop26 pledge and significant finance providers, have yet to publicly reveal how they will meet their commitments – despite an end-of-2022 deadline to do so.
Launched at the Glasgow summit, the agreement committed signatories to end direct public finance 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”. It was hailed as a breakthrough by typically wary campaign groups.
According to the policies released by the Glasgow signatories so far, Oil Change International says the deal has prevented around US$5.7bn in support for fossil fuel projects, based on each country’s average support to the sector in 2018-20.
Global public finance for fossil fuels was already on a downward trajectory, falling to US$55bn on average per year in 2019-2021, a 35% drop compared to the previous three years. Some of the biggest ECA backers of the sector, such as China, Japan and South Korea, did not sign up to the Glasgow pledge.
Oil Change International’s report, which tracks progress toward meeting the Cop26 public finance goals, says that while most high-income countries have released policies – albeit some with what it labels significant loopholes – four states are yet to do so.
Germany and Italy, whose export credit agencies (ECAs) are top backers of fossil fuel projects, according to their own disclosures and Oil Change International’s public finance database, are among those still without a policy.
The two countries are also the only remaining members of the 10-country Export Finance for Future (E3F) alliance not to have published a plan and timetable for exiting fossil fuels.
“Our research shows that while the Glasgow statement is a success story that’s having a real-world impact in shifting finance away from fossil fuels, some countries like the US, Germany and Italy have broken their promise,” says Adam McGibbon, the lead author of the report.
Italian ECA Sace, which is considering backing multiple fossil fuel projects even after its commitment to end support for dirty energy sources by the end of last year, did not respond to requests for comment or confirm if it has met its commitment under the Glasgow agreement.
A spokesperson for Germany’s ministry of economic affairs and climate action tells GTR Germany has been abiding by the Cop26 pact since January this year, but adds: “We are currently still co-ordinating within the government on how exactly exceptions are to be defined, taking into account the energy security crisis as a result of the Russian aggression against Ukraine and the compliance of exceptions with the Paris Agreement and the 1.5° pathway.”
“Detailed policies for relevant instruments and institutions will be published, eg in the context of E3F, as soon as the process is concluded. In the meantime, any relevant project is assessed on a case-by-case basis.” In 2021, the country also provided €8.1bn in climate finance to developing countries, the spokesperson says.
In the US, the Biden administration has declined to publish the guidance it provided to the Export-Import Bank (US Exim) on how the agency should abide by Washington’s promises under Glasgow.
Even before the Glasgow pledge, in early 2021, US President Joe Biden issued an executive order mandating US Exim and similar agencies to work towards “ending international financing of carbon-intensive fossil fuel-based energy”.
A US Exim spokesperson points out that despite the executive order and the US’ international pledges, the agency’s mandate still prohibits it from barring or rejecting applications based on which sector they come from.
“Regardless, Exim continues to be at the forefront of advancing renewable energy financing, remains value aligned with the Biden-Harris administration, will focus on supporting good paying US jobs in all sectors, and will do everything within its statutory authority to drive the global energy transition using American exports,” the agency says in a statement to GTR.
The Portuguese ECA, Cosec, did not respond to written questions from GTR. Oil Change International’s progress report does not cover low- and middle-income signatories to the Cop26 statement because their relative contribution to international public finance is limited.
McGibbon says the countries yet to disclose how they are honouring their vows made in 2021 “must immediately implement policies to keep the promise they made in Glasgow, phasing out international public finance for fossil fuels, or face growing international scrutiny as promise-breakers on climate policy”.
The post Germany, Italy labelled promise-breakers over lack of Cop26 action appeared first on Global Trade Review (GTR).
Go to the Source – Germany, Italy labelled promise-breakers over lack of Cop26 action