By Faridat Salifu
The Organisation for Economic Cooperation and Development (OECD) is meeting in Paris this week for its annual forum.
The meeting presents an opportunity for the forum to take decisions towards ending the flow of public money into fossil fuels.
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.
They said this allows them to get on with “building better policies for better lives” without distraction.
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.
According to reports, between 2018 and 2020, OECD Export Credit Agencies (ECAs) 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 even as they spend five times more on fossil fuels than renewable energy projects every year.
Analysts say without ECA support, many new oil and gas projects would not go ahead as over the last decade, these institutions have pumped over $80billion into liquefied natural gas (LNG) projects, which receive the overwhelming majority of ECA support.
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The projects included the Vaca Muerta gas pipeline in Argentina, a carbon bomb that threatens to release 50 billion tons of carbon dioxide over its lifetime; and $14billion in loans and guarantees to a controversial LNG project in Mozambique.
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.
It was gathered that 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.
Regrettably, some OECD countries have backtracked on their commitment as data 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.
Reports say, this year alone, the US, via its ECA, the United States Export-Import Bank (EXIM), provided $740million to oil and gas projects around the world.
This is in defiance to an earlier agreement as the OECD members already signalled the beginning of the end for public fossil fuel finance, by ending ECA support to coal-fired power in 2021.
According to an analyst, Sandrine Dixson-Decleve, “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.”
