7-Country European Alliance To End Export Financing For Fossil Fuels

7-Country European Alliance To End Export Financing For Fossil Fuels

During a virtual meeting yesterday, seven European countries came together to formally launch the Export Finance for Future (E3F) coalition, a new alliance aimed at ending public export guarantees for fossil fuel projects, as part of efforts to reduce carbon emissions and fight climate change. Other than France, the host country, the conference was attended by the governments of Denmark, Sweden, Spain, Germany, Netherlands, and the UK. 

The purpose of the coalition is to establish coordination among the 7 member countries, which are said to hold a 40% stake in export finance in the Organisation for Economic Co-operation and Development (OECD), so that official trade and export finance “directed to unabated coal power” can be ended immediately, and that related to other fossil fuels can be phased out best after due assessment of “each country’s industrial specifics and impact on jobs.” 

“Today, for the first time, several countries publicly committed to massively increase support for sustainable projects and to assess how to best phase out export finance support to oil and gas industries,” said Bruno Le Maire, who chaired the meeting. The French Minister for Economy, Finance and Recovery added,“The moment is decisive.”

A few of these countries have already rolled out policies to put a stop to government support for fossil fuel projects. For instance, in December last year, the UK announced that March 31, 2021 onwards, it would stop “export finance, aid funding and trade promotion for new crude oil, natural gas or thermal coal projects, with very limited exceptions.” France too stopped state support for new coal projects and will reduce support for oil and gas gradually, with a goal of complete withdrawal by 2035. 

However, Oil Change International, a campaign group based in the US, found these steps inadequate and in a press release a day ahead of the E3F conference, it said, “the UK, which had agreed to finance Mozambique LNG before adopting its new policy, the Netherlands, and France, have all yet failed to withdraw their export support for the gas developments in Mozambique. This is despite the escalation of violence in the region, which is deeply interlinked with the gas projects and has killed over 2,600 people. Their finance will clearly not be ‘for the future’ unless they withdraw.”

The organisation warned that “self-proclaimed export finance leaders will fail to lead unless they put a halt to new export support for oil and gas now, not in 5 or 10 years from now. Even if coal use were phased out over night, the emissions from oil and gas in existing fields alone would push average global temperature rise beyond 1.5°C.” Nevertheless, it appreciated the building momentum for political leadership that would likely inspire countries across the world to take significant steps towards sustainability. 

The E3F alliance has not issued a common timeline for shutting down fossil fuel support, leaving the task at the discretion of individual governments. Le Maire has welcomed “all countries sharing our convictions to join this alliance,” and wishes to get the US government on board as well. John Kerry, Special Presidential Envoy for Climate, announced in January this year that the Biden administration was ending public international fossil fuel financing.

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Soumya Duggal

Soumya is a master's degree holder in English, with a passion for writing. It's an interest she has directed towards environmental writing recently, with a special emphasis on the progress being made in renewable energy.