UK seeks alliance to end public funding of overseas coal, oil and gas projects
Cop26 hosts try to form a coalition of countries to align public finances with a 1.5 ° C global warming limit, the most difficult goal of the Paris Agreement
The UK government is working to launch a coalition of countries and financial institutions committed to ending public funding of fossil fuels overseas during the UN climate talks in Glasgow in November.
The host of Cop26 has repeatedly said he wants the summit to “put coal to history” and worked with Italy to seek an agreement between major economies to end energy relentlessly charcoal.
But the UK’s ambition goes beyond coal. It seeks to build an alliance of nations and institutions ready to commit to ending funding for oil and gas projects internationally.
The UK is working with the European Investment Bank (EIB) to convince developed and developing countries as well as major financial institutions such as multilateral development banks to sign a declaration on aligning public finances with the acceleration of the transition to clean energies.
They call on donors and lenders to prioritize support for clean energy, end public funding for fossil fuels, and push others to do the same. Climate Home News understands that the UK hopes to launch the statement at the energy day at Cop26 on November 4.
In a commentary article published in Project Syndicate on Friday, John Murton, the UK government’s envoy to Cop26, and Werner Hoyer, chairman of the EIB, wrote that at Cop26 “governments and financial institutions must commit to supporting cheaper, cleaner, no-regrets energy. , and to end all international support for fossil fuel energy ”.
“This shouldn’t be too difficult, given that many legacy energy investments will inevitably become stranded assets,” they said, adding that “the cost of inaction would be catastrophic.”
from China Power crisis could fuel anti-climate backlash, analysts warn
As of March of this year, the UK has ended all direct government support for the extraction, production, transportation and refining of crude oil, natural gas or thermal coal internationally. Under certain limited circumstances, it will still support gas-fired power plants if it aligns with a long-term path of 1.5 ° C.
In 2019, the EIB, the world’s largest development bank, announced that it would stop funding oil and gas projects relentlessly by the end of 2021 as part of a major overhaul of its lending policy. .
While there is a broad consensus that funding for coal must end, the end of support for oil and particularly gas is much more politically sensitive.
In a letter last month to Cop26 boss Alok Sharma seen by Climate Home News, activists from more than 200 organizations called for strict restrictions on all fossil fuels, including gas. They argue that renewables are cost competitive and can meet the electricity and clean cooking needs of the Global South.
But gas dominates international energy financing flows from multilateral development banks (MDBs) and G20 countries. From 2017 to 2019, low- and middle-income countries received on average nearly $ 16 billion in international public funding per year, four times more than wind or solar, according to the International Institute for Sustainable Development ( IISD).
The United States was the third largest donor of gas after China and Japan, contributing an average of $ 2.4 billion per year to financing gas abroad.
Jake Schmidt, who heads the international climate program at the Washington-based Natural Resources Defense Council (NRDC), told Climate Home that the United States should be able to adhere to the declaration before Cop26, but that language on the end of gas financing could be controversial.
On expert opinion, South Africa cuts its emissions cap by a third for 2030
Last month, the US Treasury asked its representatives in the MDBs to exclude all support for gas, coal and oil production along the value chain.
The policy allows investments in gas infrastructure to continue in fragile and conflict-affected countries and small island developing states if analysis shows that there is no feasible clean energy alternative and that the project would have a significant positive impact on access to energy, which gives more leeway than the British position.
“I don’t think the United States will adhere to anything more aggressive than its own guidelines,” Schmidt said.
Joe Biden’s administration is expected to issue more guidance on how the United States “can promote an end to international financing of carbon-intensive fossil fuel energy” before Cop26. The State Department will likely wait until the announcement is made before committing to the international stage, Schmidt added.
And Washington DC isn’t the only one likely to negotiate the language around gas. German public development bank KfW will continue to support gas projects and some oil and diesel power plants on a case-by-case basis, with support limited by quotas until 2029, in line with guidelines that came into effect on September 1.
Some developing countries like Nigeria are likely to defend gas financing. About 43% of Nigeria’s 200 million people do not have access to the electricity grid, making it the country with the largest energy access deficit in the world, according to the World Bank.
The country’s Environment Minister Mohammad Mahmood Abubakar told a UN meeting in June that an international crackdown on gas financing threatens sub-Saharan Africa’s ability to achieve a just energy transition and fair.
Chukwumerije Okereke, Nigerian professor of environment and development, told Climate Home that the government is supporting increased gas production to meet energy demand.
“As we encourage rural people to stop cooking with wood and switch to gas and the government tries to increase the energy supply to the population, the international community is ending investments in gas. while donor countries still use gas. this. This is not my definition of climate justice, ”he said.
Okereke said any initiative to cut emissions must take development needs into account. “Otherwise, it’s not going to fly,” he said, adding that investments in renewables on the continent were still insufficient.