COP Produces Pact to End Fossil Fuel Funding
More than 20 countries have pledged to stop funding foreign fossil fuel projects, although the impact of the deal is undermined by the absence of key countries.
The pact, whose signatories include Canada and the US, isn’t binding but aims to stop foreign fossil-fuel funding by the end of 2022. UK energy minister Greg Hands said it has the potential to shift more than US$15 billion annually of public finance.
But the holdouts undermine the impact. China, Japan, South Korea and Spain haven’t signed on and those countries together — in the two years through 2020 — funnelled some US$32 billion to fossil fuel projects, according to analysis by Oil Change International and Friends of the Earth.
In some last-minute drama, Italy, which is co-hosting COP, joined the accord on the morning of the 4th November. Rome had told the UK on the 3rd November night it wouldn’t sign, according to people familiar with the situation. A spokeswoman for Ecological Transition Minister Roberto Cingolani said negotiators had been working to the deadline.
The agreement applies to new, direct public support for unabated fossil fuel energy projects. It has exceptions in “limited and clearly defined circumstances.” Some of the signatories are on the list as potential recipients of cash rather than funders.
Greenpeace and CAFOD were among non-government organisations to welcoming the pact — with reservations.
“This statement is a start, but we urgently need more countries on board. Public finance shouldn’t be anywhere near fossil fuels if we want any chance of keeping within 1.5 degrees C,” said Robin Mace-Snaith, policy lead for climate at CAFOD.
The UK also announced a separate pledge by dozens of institutions and countries to phase out coal power, including 18 nations, such as Vietnam, Poland and Chile, making such a commitment for the first time. The US and China aren’t on the list and the plan falls short of the UK hosts’ initial COP ambition to “consign coal to history.”
Under the pact, nations aim to stop the use of coal-fired power generation in the 2030s and 2040s, and agreed to end investments in the sector both domestically and overseas.
Both the Group of Seven and G-20 have already agreed to stop financing overseas coal projects. The UK, US and the European Union have announced restrictions on foreign fossil fuel finance.
In 2020, G-20 nations alone contributed nearly US$600 billion to oil, gas and coal projects, according to BloombergNEF estimates. Activists hope to use the joint statement to help pressure financiers and countries which didn’t sign the pledge and are still devoting tens of billions to foreign fossil projects annually.