The United States has joined a group of more than 20 countries, including the United Kingdom, Italy, and Canada, vowing to end government funding of overseas coal, oil, and gas projects by the end of next year and prioritize clean energy finance instead.
The nonbinding agreement announced Thursday at a major United Nations climate summit in Glasgow, Scotland, applies to public support for “unabated” fossil fuel projects, meaning those built without carbon capture technologies that stop emissions from entering the atmosphere.
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It contains exceptions for projects that serve “limited and clearly defined circumstances that are consistent” with the goal of the Paris Agreement to hold global warming to 1.5 degrees Celsius. That loophole, for example, could enable the financing of natural gas facilities in coal-dependent poor countries with growing energy demand when there is no economically and technically feasible cleaner alternative.
The three largest fossil fuel financiers, China, Japan, and South Korea, did not sign the pledge. Those three countries have recently pledged to end overseas finance of coal projects, but cutting off oil and gas projects was a step too far for them.
Collin Rees, senior campaigner for Oil Change U.S., a group that pushes to keep fossil fuels in the ground, noted the pledge comes after the International Energy Agency, a major research body, said in a surprising report in May that investments in new oil and gas development must immediately stop to reach net-zero global emissions.
“This is very substantial and very significant as an announcement, both at a material level in terms of money and symbolically, showing where the discussion is going,” Rees told the Washington Examiner.
The Biden administration still has to flesh out the specifics of the U.S. policy. Most of its public financing of overseas fossil fuel projects comes through the EX-IM Bank and U.S. International Development Finance Corporation.
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In the past five years, the International Development Finance Corporation and its predecessor, Overseas Private Investment Corporation, approved almost $4 billion for overseas fossil fuel projects, according to Friend of the Earth. In addition, EX-IM has approved over $5 billion for fossil fuel projects abroad in the last two years.
