Handful of Governments Block Clean Energy Transition With Billions in International Finance For Fossil Fuels

Despite the biggest increase in G20 and Multilateral Development Bank (MDB) international finance for clean energy in 2022, a new report reveals a handful of nations are blocking a just transition to renewable energy with outsized financial support for fossil fuels.

The new report, Public Enemies: Assessing MDB and G20 international finance institutions’ energy finance by Oil Change International and Friends of the Earth United States, and endorsed by 23 other civil society organizations, highlights an alarming trend in international energy finance.

G20 and MDB international public finance for energy between 2020 and 2022 poured fuel on the fire by contributing a staggering US$142 billion towards fossil fuels, while only US$104 billion supported clean energy projects. The report has been released alongside updated energy finance data on energyfinance.org.

To limit warming to 1.5°C in line with international climate agreements, 60% of already-developed fossil fuel reserves must stay in the ground. In light of these limits, the IEA has sent a clear message that there should not be any new oil and gas field or LNG investments – public or private – beyond what was already committed as of 2021.

The findings reveal that between 2020 and 2022 the wealthiest G20 nations are the primary culprits behind continued investments in fossil fuels, with Canada, Korea, and Japan as the worst offenders.

Canada: As of the end of 2022, Canada fulfilled their commitment to the Clean Energy Transition Partnership (CETP) to end international finance for fossil fuels, and is under pressure to meet a separate pledge to end their much larger domestic ECA fossil fuel finance in 2024.

Japan: Despite being a signatory to the near identical G7 commitment to phase out international public finance for fossil fuels, Japan has yet to take steps to put commitments into action. Loopholes in Japan’s policy continue to enable fossil fuel financing, further exacerbating the climate crisis.

South Korea: South Korea is the only major fossil financier that has yet to put in place any policies to end its oil and gas support.

The report also highlights where there is momentum to shift public finance out of fossil fuels. It shows that coal exclusion policies have worked to nearly eliminate all international public finance for coal.

Seven G20 countries are also signatories to the CETP, and pledged to end their international public finance for fossil fuels by the end of 2022 and prioritise support fully towards the clean energy transition.

While many signatories have followed through on their commitment, a few CETP signatories are undermining this progress, including the United States, Italy, and Germany, by continuing to provide billions of dollars to fossil fuel projects well past the end of 2022 deadline.

If countries honour their existing commitments to end not only coal finance but also oil and gas finance, including their CETP commitment to negotiate an oil and gas ban at the OECD, it will shift US$33.5 billion annually out of fossil fuels.

Claire O’Manique, Public Finance Analyst at Oil Change International, said: “While rich countries continue to drag their feet and claim they can’t afford to fund a globally just energy transition, countries like Canada, Korea, Japan, and the US appear to have no shortage of public funds for climate-wrecking fossil fuels. We must continue to hold wealthy countries accountable for their role in funding the climate crisis, and demand they move first and fastest on a fossil fuel phaseout, to stop funding fossil fuels, and that they pay their fair share of a globally just transition, loss and damage and adaptation finance.”