Discussions at this week’s OECD Export Credits Forum in Paris face a new geopolitical reality after South Korea blocked 1 a landmark climate agreement that would have ended USD 41 billion 2 in annual taxpayer financing for fossil fuels at the end of last year. After nearly two years of EU and UK-led negotiations 3 , the binding agreement would have halted direct financial export support 4 for fossil fuel projects provided by Organization for Economic Cooperation and Development (OECD) countries, an exclusive group of the world’s wealthiest nations.
Negotiators are meeting in Paris this week at the OECD Export Credits Forum, it is clear that the opportunity that existed at the last meeting, before the Trump Administration took office, is gone.
Alongside the EU, the UK, Canada, US, New Zealand, Australia and Norway supported binding OECD fossil fuel restrictions after already adopting such restrictions at the national level as part of the Clean Energy Transition Partnership. However, South Korea stalled negotiations 5 until the change in US administration, rejecting even basic transparency measures for export finance. It blocked what could have been a historic deal that would have catalysed the global clean energy transition and supported parallel and pressing energy security and affordability objectives. Most OECD export finance for fossil fuels flows to Liquefied Natural Gas (LNG) projects. Rather than supporting energy security or affordability, these projects increase countries’ exposure to volatile gas markets and, according to a recently published report from Carbon Tracker, involve stranded assets risks 6 as the market is on a trajectory towards oversupply as gas demand drops.
Amidst growing geopolitical instability, OECD countries committed to climate leadership must continue to walk the walk and find new ways to end international taxpayer subsidies for fossil fuels, while increasing support for a just energy transition. Efforts to end international public finance for fossil fuels is not only a critical win for the climate, but also equally important for energy security and affordability worldwide.
The Export Credits Forum is also taking place as news is breaking that the US Export Credit Agency, US EXIM, is set to approve financing for the controversial Mozambique LNG project, which is mired in allegations of human rights violations 7 as well as having the potential to have annual emissions as large as all 27 EU countries combined. 8 EXIM is set to take this decision at its board meeting tomorrow. 9
In response:
Dongjae Oh, Head of Oil and Gas, Solutions for Our Climate (Korea), said: “South Korea’s reluctance to align with its partners in restricting fossil fuel financing was a major obstacle in the negotiations, contributing to their failure. At a time when renewable energy is expanding globally, Korea has instead chosen to side with the fossil fuel industry—jeopardizing our planet’s future. This year, Korea must step up and work with its allies to make a meaningful commitment to combating climate change by ending fossil fuel finance, whether through OECD mechanisms or bilateral agreements. If it fails to act, Korea risks being left behind as the world transitions to a cleaner, more sustainable future.”
Nina Pusic, Export Finance Climate Strategist, Oil Change International, said: “Despite the disappointing outcome, an unprecedented number of OECD countries worked around their differences and nearly reached an agreement to end the largest flow of international public money to oil and gas. We expect those countries who argued for fossil fuel restrictions to stay committed in their leadership and meet their international obligations to stop funding fossil fuels and instead support a just transition to reliable and affordable renewable energy.”
This content originally appeared on Common Dreams 10 and was authored by Newswire Editor.