The U.S. and EU Are at Odds Over Fossil Fuel Funding
The U.S. and EU Are at Odds Over Fossil Fuel Funding | OilPrice.com
The U.S. and EU Are at Odds Over Fossil Fuel Funding
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The United States and the European Union are at odds over how far a ban on fossil fuel loans and guarantees would extend and haven’t reached an agreement at the latest round of talks within the OECD organization of the most developed nations, sources with knowledge of the discussions have told the Financial Times.
OECD members, which include the U.S., the EU, Canada, the UK, Japan, and South Korea, among others, have recently held a round of talks in Paris, without reaching any compromise about the extent to ban export credit agencies (ECAs) from extending or guaranteeing loans for oil, natural gas, and coal projects. More discussions are expected to be held in the summer and the autumn.
The EU is proposing that ECAs only support projects that are aligned with a 1.5-degree Celsius scenario. The U.S., however, seems to be reluctant to draw that line.
Stricter financing rules could affect the role of the U.S credit export agency, Exim, whose charter says that it should not discriminate against any industry.
Most recently, the U.S. Export-Import Bank approved earlier this month a loan guarantee of $500 million for a Bahrain oil project despite opposition from Democrats noting the move would compromise the Biden Administration’s hard line on climate change.
Export credit agencies of OECD member states are the world’s largest public financiers of fossil fuels, from supporting an average of $33.5 billion per year of public money to coal, oil, and fossil gas projects, according to an analysis by environmental organizations Friends of the Earth and Oil Change International. Moreover, oil and gas currently account for more than 90% of ECA energy finance.
“Export credit agencies’ continued support for oil and gas projects completely undermines global climate goals under the Paris Agreements, keeping a 1.5 C global warming trajectory far out of reach,” Nina Puši?, Export Finance Strategist at Oil Change International, said last year.
By Tsvetana Paraskova for Oilprice.com
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Related Knowledge Center: Climate diplomacy
Talks are well underway in preparation for the next major international meeting on climate change, 28th Conference of the Parties (COP28), scheduled to begin Nov. 30 in the United Arab Emirates.
Much like last year’s COP27, finances — specifically, aid to developing nations — will be at the center of conference deliberations.
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