Pressure on wealthy governments to stop financing polluting coal projects in developing nations is getting results, with more countries expected to announce in the coming months that they no longer plan to provide money for coal.
Yet the battle is far from won — and is now shifting to include oil and gas finance, climate change campaigners have said.
The UK has led the way among major donors, saying that it would provide no new government financing for fossil fuel projects overseas from this month, with “very limited” exceptions.
Illustration: Mountain People
At the Leaders Summit on Climate organized by US President Joe Biden last week, South Korean President Moon Jae-in declared a moratorium on overseas coal financing.
Other nations could soon join them in pledging to phase out overseas aid for coal, climate finance experts have said.
However, US environmentalists are less hopeful about US action than in January when US Special Presidential Envoy for Climate John Kerry told the World Economic Forum that the Biden administration would produce a plan to end international financing for fossil fuel projects.
Earlier this month, 57 US green groups wrote to Kerry urging him to “unequivocally declare that gas is not part of the solution” and to immediately end all fossil fuel support internationally, as well as US exports of fossil fuels “as science and justice require.”
The move came after Kerry this month told a discussion with the head of the IMF that “gas, to some degree, will be a bridge fuel,” meaning that it could smooth the transition from the dirtiest energy sources — coal and oil — to renewables.
Kate DeAngelis, international finance program manager for Friends of the Earth, said that Kerry’s comments were “jarring” and suggested the US planned to continue providing funding for gas projects in places such as sub-Saharan Africa.
“I think they are taking a very conservative approach, which is just 10 steps back from what they had ... laid out in January,” she said.
She and other campaigners say the details are crucial on commitments on overseas fossil fuel funding and that donors must spell out clearly which fuels and state agencies are covered by their promises, as well as set near-term deadlines.
MOZAMBICAN GAS
This month, Denmark, France, Germany, the Netherlands, Spain, Sweden and the UK agreed to harness public export finance as “a key driver in the fight against climate change.”
Governments in the new Export Finance for Future (E3F) coalition endorsed principles including ending trade and export support for coal power that does not have technology to lower its emissions, reviewing finance for fossil fuels more broadly and assessing how to best phase that finance out.
However, about 20 environmental organizations said in a statement that the coalition had made no new commitments.
“To make a real difference, [E3F] needs to take decisive action to end all export finance for fossil fuels, following at least the level of ambition shown by the UK, which put an end to virtually all new export finance for fossil fuels last month,” they said.
France, the Netherlands and the UK continued to provide support for gas extraction in violence-hit northern Mozambique, and the investments had forced communities from their homes after losing their fishing areas and farmland, they said.
On Wednesday last week, Mozambican President Filipe Nyusi told an energy conference that the government foresees “direct benefits” of more than US$100 billion from the gas projects, which are expected to generate 70,000 formal jobs over 20 years from next year.
However, French energy giant Total SE on Monday indefinitely suspended work on its US$20 billion liquefied natural gas (LNG) project in Mozambique due to rising Islamist security threats in the area.
Clean energy advocates have said that such projects could result in “stranded” assets and job losses as the world moves away from fossil fuels to curb climate change.
In the UK, Friends of the Earth has applied for a judicial review of the UK decision to provide about US$1 billion of taxpayer money to support development of the Temane LNG plant in Mozambique.
That decision was made on “the incorrect basis” that the project was consistent with commitments by the UK and Mozambique under the 2015 Paris Agreement to curb global warming, Friends of the Earth said in a statement.
It added that construction of the project would increase the African nation’s greenhouse gas emissions by up to 10 percent by next year, while annual emissions from using and burning the gas produced would equal the total from the EU aviation sector.
“This huge gas project will fuel the climate emergency and deal yet another devastating blow to the UK government’s credibility as it prepares to host this year’s crucial climate talks,” said Will Rundle, head of legal at Friends of the Earth.
While London’s new policy would prevent it from funding such projects on climate grounds in future, the British government confirmed to the Thomson Reuters Foundation that the policy would not apply retrospectively to the Mozambique financing.
Mozambique considers gas from the project an important part of its transition to cleaner energy in line with its national climate action plan and its Paris Agreement commitments, a government source said.
BOOST FOR RENEWABLES
Meanwhile, export finance and development agencies on both sides of the Atlantic are keen to stress their backing to expand renewable energy in poor countries.
UK Export Finance, the British government’s export credit agency, last week said that it provided more than ￡2.4 billion (US$3.3 billion) of financial support to “sustainable projects” last year, including hospitals, clean energy and critical infrastructure in developing nations.
The US International Development Finance Corp also recently invited private companies to apply for public financing to help them expand their businesses in small-scale renewable energy, with plans to invest US$100 million in such firms in a year.
However, campaigners say the amount of government money available for the fossil fuel industry still dwarfs that for clean energy.
According to Oil Change International and Friends of the Earth, which track such funding, G20 countries from 2016 to 2018 provided an average of US$77 billion per year in public finance for fossil fuels through export credit agencies and development banks, compared with US$24 billion a year for clean energy.
Oil Change International campaigner Laurie van der Burg urged the G7 club of the richest nations to set an example and clearly state at their June summit that they would no longer finance coal, and would develop plans to shift away from oil and gas.
“I do think that 2021 has the potential to become the year in which, for the first time, we see the balance of public finance tip from fossil fuels to clean energy, because right now it’s still mostly fossil fuels,” she said.
Additional reporting by staff writer
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