Seven European countries have formally pledged to end support for export finance agencies for fossil fuel projects. This group strategy seeks to reduce government subsidies for high-emissions energy sources.
Currently, more than 35% of public appropriations within the OECD go to fossil fuel projects. Too high a percentage that conflicts with the European Union’s neutrality goals.
Denmark, France, Germany, the Netherlands, Spain, Sweden and the United Kingdom announced a new alliance. Its core principle is to align export finance with climate goals.
The alliance is called Export Finance for the Future (E3F) and it was signed on Wednesday, after a hypothetical meeting organized by the General Directorate of Treasury at the French Finance Ministry.
“Today, for the first time, several countries pledged publicly to increase their support for sustainable projects substantially. To assess the best way to phase out financial support for exports to the oil and gas industries,” said French Finance Minister Bruno Le Maire. “The moment is decisive.”
European countries stop fossil fuel projects
The seven countries that will intervene in climate interests over fossil fuels account for around 40% of export financing in the Organization for Economic Cooperation and Development. At the meeting, they pledged to end “official trade and export financing for uninterruptible coal energy.” As well as thermal coal mines and coal supply chain infrastructure.
However, for other fossil fuels, they promised instead to “review official financial support for trade and exports. At the same time, analyze how to remove subsidies to these sectors, taking into account the characteristics of each,” Le Maire said.
For the first time, a group of countries is publicly demonstrating their willingness to increase support for sustainable and climate-friendly projects. And restrictions on fossil fuels abroad.
Pioneers taking coordinated action are essential to build momentum globally and accelerate the transition to a low-carbon economy. Another principle of the Economic and Social Forum (E3F) is to gather as many new member states as possible quickly to gain critical mass. To accelerate the phase-out of carbon-intensive projects and increase financial support for projects from exporters in line with the Paris Agreement.
France encouraged this alliance, which was complemented by its domestic politics. Early last fall, he decided to adopt a “climate plan” in his medium-term economic plan. The plan will gradually cut off any kind of financing for hydrocarbon projects, both on the national territory and abroad.
Efforts and commitments face other decisions
Agreement members have not committed to a single timeline for reducing fossil fuel subsidies. “It will depend on each government,” Le Maire said at the meeting.
It is “hypocritical” for European countries to adopt strict domestic broadcasting rules. But he added support for emissions-intensive projects abroad.
Some European countries that are part of the alliance have announced their own moves to end funding for fossil fuel projects. The United Kingdom revealed in late 2020 that it would stop “financing exports, aid and commercial promotion of new projects for crude oil, natural gas or thermal coal. With very few exceptions” effective March 31, 2021.
Meanwhile, Sweden’s export credit agency, EKN, has revealed that it will stop funding fossil fuel exploration and extraction projects by 2022.
In addition to these countries’ joint efforts, there are occasional decisions that go against environmental purposes.
This is the case of the European Investment Bank (EIB), which considered the 3,500 km natural gas pipeline to be “climate neutral”. Before two parts of this mega fossil fuel project were awarded a total of € 935 million in public funds from the European Union.
An analysis by the NGO Oil Change International disproves the EIB’s arguments for continued investment in fossil fuel infrastructure. By ensuring that the eight climate action scenarios developed by the European Commission include a significant reduction in gas use, which does not justify investment in these infrastructure.
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