The UK and EU are set to urge the world’s wealthiest countries to end subsidies for foreign oil and gas operations and coal mining at an upcoming closed-door meeting of the Organization for Economic Co-operation and Development (OECD), as reported by the Financial Times on October 29. The proposal, if successful, could result in a significant reduction in financial support for fossil fuel projects abroad and facilitate the transition towards cleaner energy sources. According to data from US environment campaign group Oil Change International, from 2018 to 2020, export credit agencies of OECD countries spent an estimated USD41bn per year to support coal, oil, and gas projects. The spending was nearly five times more than their support for clean energy projects during the same period.

The proposal is based on the commitment by some OECD countries to align their public finance institutions with the climate objectives of the Paris Agreement. However, the initiative requires a broader consensus among OECD member states, as some OECD countries, such as Japan are South Korea, are still reliant on fossil fuel imports. On the other hand, the proposal to end subsidies for foreign fossil fuel projects also exposes the persistence of subsidies for fossil fuel industry within the EU. The European Commission acknowledged that, during the energy crisis in 2022, the total subsidies for fossil fuel projects within the bloc surged to EUR122bn from EUR56bn in the previous year. This alarming increase shows the need for immediate actions to limit fossil fuels.

Sources:

https://www.ft.com/content/b4d0e4be-aa81-4345-a004-b76cafc5129e

https://www.reuters.com/sustainability/eu-wrangles-over-negotiating-stance-cop28-climate-summit-2023-10-16/