The Organisation for Economic Cooperation and Development (OECD) is meeting in Paris this week for its annual forum. On the negotiating table is a once-in-a-decade opportunity to end the flow of public money into fossil fuels, but you’d be forgiven for not knowing about it.
The OECD is made up of a group of primarily wealthy countries, who collectively set their own standards around big global issues like tax, trade and the environment.
Despite being one of the world’s most influential trade bodies, decisions at the OECD often happen behind closed doors.
Members say that this allows them to get on with “building better policies for better lives” without distraction.
The problem is that channelling billions of dollars of public money into fossil fuels each year doesn’t square with that aim.
The OECD regulates its members’ “export credit agencies”. These are government-owned institutions that provide loans, guarantees, credit and other forms of financial services – often at subsidised rates – to large infrastructure projects around the world.
Between 2018 and 2020, OECD export credit agencies (ECAs) also provided more international public finance for fossil fuels ($41 billion) than any other type of public finance institution, including multilateral development banks like the World Bank. They spent five times more on fossil fuels than renewable energy projects every year.
Too much LNG
Without ECA support, many new oil and gas projects would not go ahead. Over the last decade, these institutions have pumped over $80 billion into liquefied natural gas (LNG) projects, which receive the overwhelming majority of ECA support.
Projects include the Vaca Muerta gas pipeline in Argentina, a carbon bomb that threatens to release 50 billion tons of carbon dioxide over its lifetime; and $14 billion in loans and guarantees to a controversial LNG project in Mozambique. LNG is often cited as a bridge fuel in the clean energy transition, but the reality is the opposite. We already have more LNG infrastructure than we can use to stay within safe climate limits.
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Every dollar spent on new fossil fuels puts the brakes on our clean energy transition. To keep global temperature rise to within 1.5C – as per the Paris Agreement goal – the International Energy Agency is clear there is “no need“ for investment in new supplies of coal, oil and gas.
Under the Paris Agreement, all countries promised to “make financial flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development“, but the opaque governance structure of the OECD provides a loophole for oil and gas finance to keep flowing, via ECAs.
Public money
This isn’t a good way to spend public money. With peak demand for fossil fuels now expected as soon as 2030, any investment in new fossil fuel projects risks failing to deliver a return. Economists have estimated that around $1.4 trillion in oil and gas assets are at risk of becoming stranded.
Far from delivering energy security, public investment in fossil fuels exposes us to huge economic risks, whereas channeling this money into clean energy could open up new economic opportunities. Every dollar of investment in renewables creates three times more jobs than investment in fossil fuels.
Poll after poll shows that voters in OECD countries don’t want their money going into fossil fuels either. Almost two thirds of British and Canadian voters want their governments to stop subsidising fossil fuels.
In the United States there’s majority bipartisan support for ending fossil fuel subsidies.
Using public money to prop up a twilight industry isn’t in the public interest – it makes us all worse off.
At the Glasgow climate conference, Cop26, a majority of OECD member countries committed to ending public fossil finance for the unabated fossil fuel energy sector by the end of 2022, including by driving multilateral negotiations through the OECD.
Backtracking
Despite this, some OECD countries have backtracked on their commitment. Research from Oil Change International shows that since 2021, the United States, Germany, Italy and Japan have approved at least $5.2 billion in new public finance for international fossil fuel projects.
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This year alone, the US, via its ECA, the United States Export-Import Bank (EXIM), provided $740 million to oil and gas projects around the world. If President Joe Biden is to become the climate leader he wants to be, there is clearly much more to do.
OECD members already signalled the beginning of the end for public fossil fuel finance, by ending ECA support to coal-fired power in 2021.
The UK, EU and Canada proposals on the table represent a rare moment of leadership that must help set the stage for forging agreement on a global phase-out of fossil fuels at the upcoming climate conference in the United Arab Emirates.
They must not be shut down and strung out by OECD members still clutching onto fossil fuels such as Japan, South Korea and the United States.
Countries should use this week’s meeting to reform export credit agencies for good, so they catalyse the clean energy transition and preserve our planet, rather than destabilise it.
Sandrine Dixson-Declève is the co-president of The Club of Rome and co-lead of the Earth4All initiative
The post The OECD must take its chance to stop funding oil and gas appeared first on Climate Home News.
https://www.climatechangenews.com/2023/11/06/the-oecd-must-take-its-chance-to-stop-funding-fossil-fuels/
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Climate Change
Revealed: Scientists tell Colombia fossil-fuel transition summit to ‘halt new expansion’
Countries attending a first-of-its-kind fossil-fuel summit have been asked to consider “action recommendations” such as “halting all new fossil-fuel expansion” and “reject[ing] gas as a bridging fuel”, according to a preliminary scientific report seen by Carbon Brief.
Around 50 nations will gather in Santa Marta, Colombia from 24-29 April to debate ways to “transition away” from fossil fuels, in the face of worsening climate change and sky-high oil prices.
The talks come after a large group of nations campaigned for, but ultimately failed, to get all countries to formally agree to a “roadmap” away from fossil fuels at the COP30 climate summit in Brazil in November.
The nations gathering in Santa Marta for the summit co-hosted by Colombia and the Netherlands, call themselves the “coalition of the willing”.
Ahead of country officials arriving in Santa Marta, a global group of academics will gather in the city this week to present and discuss the latest scientific evidence on fossil-fuel phaseout, which will then inform debate among policymakers.
A preliminary scientific “synthesis report” circulated to governments attending the talks and seen by Carbon Brief offers 12 “action insights” for countries to consider, along with a wide range of “action recommendations”.
These recommendations range from “phase out subsidies on fossil-fuel production and consumption” to “kick-start a forum to develop a legal framework to ban fossil-fuel advertisements”.
‘Rapid’ assessment
The preliminary scientific report seen by Carbon Brief – titled, “Action insights for the Santa Marta process” – is the result of some rapid work by an “ad-hoc” group of around 24 scientists.
It is designed to present governments attending the talks with concrete and actionable recommendations for transitioning away from fossil fuels.
The preliminary version, which includes recommendations such as “halting all new fossil fuel expansion”, has already been circulated to governments, with a view that this could help them to prepare for the talks in advance.
It will be further debated and refined by scientists attending the academic segment of the Santa Marta talks, before a final version is made public towards the end of April, Carbon Brief understands.
The process to produce the report began shortly after the conclusion of the COP30 climate summit in Brazil in November, explains its lead author, Dr Friedrich Bohn, a research scientist and co-founder of the Earth Resilience Institute in Germany. He tells Carbon Brief:
“When [Brazil] announced there would be a Santa Marta conference led by Colombia and the Netherlands, I was sitting listening with a small group of scientists. We thought: ‘This is great news, but it should be supported by scientific expertise.’”
One of the members of Bohn’s group had a pre-existing relationship with the Colombian government, allowing a dialogue to quickly be established, he continues:
“In the beginning, the idea was to just write a peer-reviewed paper. But, because of this close connection to the Colombian government and some feedback from them, the synthesis paper evolved.”
The report came out of a “very rapidly evolved process” that relied on the “goodwill” and “enthusiasm” of the academics involved, adds coordinating author Prof Frank Jotzo, a professor of climate change economics at Australian National University. (Jotzo is a former Carbon Brief contributing editor.) He tells Carbon Brief:
“It’s an attempt to get broad coverage on relevant topics from researchers with good expertise and reputation.”
The group of 24 scientists involved spent around two months compiling the “action insights” for the report, drawing on their expertise and the latest available research, says Jotzo.
Given the rapid nature of the report, it does not aim to be “completist”, has not been externally reviewed and did not follow a stringent process for author selection comparable to that used by Intergovernmental Panel on Climate Change (IPCC) reports, he adds.
The contributors to the report currently skew to the global north and include more men than women, adds Bohn.
‘Direct guidance’
In a departure from IPCC reports, the preliminary Santa Marta synthesis report offers “very direct guidance to action”, says Jotzo.
The report lists 12 “action insights”, each with three “action recommendations”. (The list was cut down from a shortlist of about 40-50 insights, Carbon Brief understands.)
One of the most striking in the draft is “action insight 5”, which says:
“Take immediate measures to prevent future emissions. Ban new fossil infrastructure, mandate deep methane cuts, accelerate electrification and inscribe fossil-fuel phase-down targets in NDCs [nationally determined contributions] and clean-energy pathways support to low and middle income countries (LMICs).”
The accompanying three “action recommendations” include “halting all new fossil-fuel extraction and infrastructure projects ahead of a final investment decision”, “implementing deep, legally binding methane cuts in the energy sector” and “inscrib[ing] targets for fossil-fuel phase down, electrification and green exports in NDCs”.
(The draft report includes multiple references to “phasing out” and “phasing down” fossil fuels, rather than the “transition away from fossil fuels” language that was, ultimately, agreed by countries at the COP28 UN climate talks in Dubai in 2023.)
Another action insight says “public support for climate action is broadly underestimated and undermined by interest groups, but it can be strengthened by debunking greenwashing narratives”.
One recommendation for this insight is that nations “reject natural gas as a bridging technology and CCS [carbon capture and storage] techniques as scalable compensation”.
In a letter introducing the report to governments and civil society, the scientists note that making direct recommendations is a “challenge for our community”, but added:
“However, in the spirit of a constructive collaboration between science and policymaking, we allowed ourselves to identify some potential courses of action that our community would recommend for each particular issue – and we invite you to weigh these against your own circumstances and pick up whatever seems most useful for you and your colleagues.”
The prescriptiveness of the recommendations – something strictly prohibited in IPCC reports – was an explicit request from the Colombian government, Bohn says:
“The idea of actionable recommendations was introduced by the Colombian government.
“There was some discussion within the team about this. It’s a tricky area when you leave science and move to consultation. Therefore, we agreed, in the end, to call them ‘actionable recommendations’ and to make them as precise as possible, from the scientific perspective.”
Jotzo, a veteran of the IPCC process, tells Carbon Brief that it was “very liberating” to work on a report with a “free-form process”:
“The bulk of policy-related research is very readily deployed to recommendations pointing out what countries could do. The IPCC process, for example, just doesn’t allow that. As far as the summary for policymakers in the IPCC is concerned, it will usually be governments that filter out anything that could be interpreted as a specific recommendation.”
He adds that the hope is that some of the action insights might be reflected in the high-level segment of the Santa Marta conference:
“No one is under any illusions that governments will walk away from the Santa Marta conference and will have made a decision to implement recommendations one, seven and nine – or something like that. But it is a chance to insert directly applicable action points into national and plurilateral policy agendas.”
Colombia calling
The preliminary report will be further debated and refined by scientists attending the “pre-academic segment” of the Santa Marta talks.
This is taking place from 24-26 April, ahead of the “high-level segment” involving ministers and other policymakers from 28-29 April.
The pre-academic segment will also separately see the launch of a new advisory panel on fossil-fuel transition and a scientifically led roadmap for how Colombia can transition away from fossil fuels, Carbon Brief understands.
The high-level segment is expected to be attended by representatives from around 50 countries, including COP31 host Turkey and major oil-and-gas producers such as the UK, Canada, Australia, Brazil and Norway.
Countries expected to attend account for one-third of global fossil-fuel demand and one-fifth of global production, according to the Colombian government.
At the end of the conference, countries are due to release a report featuring a “menu of solutions” for transitioning away from fossil fuels, according to Colombia’s environment minister Irene Vélez Torres.
This report is in turn set to inform a global “roadmap” on transitioning away from fossil fuels being developed by the Brazilian COP30 presidency, which is due to be presented at COP31 in Turkey this November.
The Brazilian COP30 presidency offered to bring forward a “voluntary” fossil-fuel transition “roadmap” outside of the official COP process, after countries failed to formally agree to one during negotiations in Belém.
The post Revealed: Scientists tell Colombia fossil-fuel transition summit to ‘halt new expansion’ appeared first on Carbon Brief.
Revealed: Scientists tell Colombia fossil-fuel transition summit to ‘halt new expansion’
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