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Over 20 countries pledge to end overseas fossil fuel finance

E3G Press Release

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Aerial view of smoke coming out of a fossil fuel power plant.
Aerial view of smoke coming out of a fossil fuel power plant. Photo by Marcin Jozwiak on Unsplash.
  • Over 20 countries have signed a statement ‘Aligning International Public Finance With the Clean Energy Transition’, the first time a broad group of countries have agreed on the need to shift overseas finance away from all fossil fuels, financial institutions and instruments and toward clean energy. The statement, led by the UK Government, was released on Energy Day at COP26 on Thursday, 4th November.
  • Signatories will end new direct international public finance for unabated fossil fuels by the end of 2022. The agreement is expected to result in a shift of over $15 billion of fossil fuel finance towards clean energy.
  • Half of the signatories are developing and least developed economies, underscoring the importance of the transition from fossil fuels to clean energy in the context of economic development.

Story

The UK Government released a statement during COP26 Energy Day, along with over 20 other countries and public finance institutions.

The UK was the first national government to make such a pledge a year ago. The release of this statement marks the first time a large and diverse group of countries, expected to cover a third of global GDP, have signed up to a similar approach.

While the G7 were the first to put a date on ending international coal finance, the statement goes further on that ambition, putting a deadline on public oil and gas finance as well.

The action, aligning international public finance with the goals of the Paris Agreement is long overdue. In the last three years alone G20 countries channelled at least $188 billion into oil, gas, and coal projects abroad. This was 2.5 times the amount invested in renewable energy. Meanwhile, a massive ramp-up of finance in renewables within the power sector and related energy infrastructure is necessary to deliver on the “decade of action”. The IEA say these investments need to reach $2.1 trillion per annum by 2030.

Additionally, since over half of the signatories are developing countries, it is evident developing countries see their sustainable economic growth depends not on continued public finance in fossil fuels, but a massive scale-up of investments in clean energy.

E3G is calling on the Governments who have signed the statement to begin a further diplomatic drive to get all countries on board, particularly those who are significant energy funders overseas, including China, Japan, Korea and Germany.

Quotes

Lisa Fischer, Programme Leader, Climate Neutral Energy Systems

This statement is a powerful signal to policy makers and investors alike that high climate and investment risks are an inherent part of oil and gas finance, and that no investment in new oil and gas supply is necessary. It shows growing confidence that employment and revenue opportunities are strongest in the clean energy sector. Every cent of public finance in energy overseas should be used to opening these opportunities for nations across the globe.

Maria Pastukhova, Senior Policy Advisor at E3G said: 

A just energy transition on the scale and at pace needed to keep the global economy growth aligned with 1.5C goal requires a massive shift of international energy finance to readily existing clean energy solutions, and a focus on the emerging markets and developing economies. Public finance needs to kick-start the shift in these countries with a high cost of debt and largely lacking incentives for private investors. Today’s statement is a historic breakthrough.

Iskander Erzini Vernoit, Policy Advisor at E3G said:  

Today’s announcement represents a major reorientation that has taken place in international public finance in recent years. More work is now necessary to bring all financial actors together around recognition of the risks of fossil fuel investments. Now is the time for developed country governments to lead a historic global investment drive into clean energy as part of the COVID recovery.

ENDS

Available for comment

Iskander Erzini Vernoit, Policy Advisor on Climate Finance 

m: +44 7931 317 327 | iskander.erzini.vernoit@e3g.org

Maria Pastukhova, Senior Policy Advisor – Energy Diplomacy 

m: +49 16090167735 | maria.pastukhova@e3g.org

For further enquiries email press@e3g.org or phone +44 (0)7783 787 863 

Note to Editors

  1. E3G is an independent climate change think tank accelerating the transition to a climate safe world. E3G specialises in climate diplomacy, climate risk, energy policy and climate finance. -> About 
  2. To receive updates and analysis from COP26 via E3G’s daily media WhatsApp broadcast, register here
  3. Signatories will also encourage other governments, official export credit agencies and public finance institutions to implement similar commitments into COP27 and beyond. This includes driving multilateral negotiations in international bodies, in particular in the OECD, to review, update and strengthen their governance frameworks to align with the Paris Agreement goals. For government signatories, this will also guide our approach on the boards of multilateral development banks.   
  4. The Statement will be part of the Energy Day on November 4th at 10.30 BST, the launch will take place in the UK Pavilion and will be streamed online. UK Pavilion events will be live streamed on the UK Government YouTube

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