OECD Fossil Fuels Curtailment Plan

Article content

(Bloomberg) — Talks on a plan by wealthy nations to throw tens of billions of dollars into public support for oil and gas projects have broken down without a deal, just weeks before President-elect Donald Trump takes office.

Article content

Article content

The EU, UK, US and other countries have sought an agreement to reduce export agency funding for global fossil fuel projects under the umbrella of the Organization for Economic Co-operation and Development, a group of market-based economies. While improving export transparency remains a goal, the chances of a comprehensive agreement to curb support for hydrocarbon projects are remote, said senior US officials, who spoke on the condition of anonymity because the talks are confidential.

Article content

The failure is the result of climate activists, who saw the proposed cuts as a key way to free up funding for inefficient energy systems around the world. While the US under outgoing President Joe Biden has rallied behind more restrictions, this is unlikely to gain support under Trump, who campaigned on promises to free up US oil and gas development and pressure allies to buy more US energy.

“Transparency measures are not good enough,” said Adam McGibbon, campaign strategist for the advocacy group Oil Change International. “We can’t afford another cent to increase fuel if we want to save a living planet.”

Although the EU advanced the plan last year, negotiations began in earnest with a new approach, provided by the US in November, after Trump won the presidential election. The talks had been stalled for months earlier due to concerns from the US Export-Import Bank, an independent agency that is mandated to prevent the denial of financing to any industry, sector or business.

During the meeting held in Paris in November, the US proposed to include a limit based on technology, based on the production of the withdrawal of funds that was seen as compatible with the charter. That policy innovation allowed the US to support the EU’s proposal while still maintaining credibility and restrictions on American banking, one of the officials said.

Article content

Article content

Problematic expressions

But it wasn’t enough. Weeks of grueling negotiations – including a session in Paris and subsequent virtual meetings – have failed to overcome concerns about national security, competition and the accounting of emissions raised by South Korea and Turkey. Countries are also faced with technical questions about the appropriate methods of calculating the emissions of various energy projects, which is necessary to ensure transparency and compliance with the national level, one of the officials said.

OECD members have a long-standing agreement that allows them to use export credit agencies to give preference to domestic companies in international agreements without violating World Trade Organization rules. The 38 countries of this club have the motivation to comply with the OECD principles governing this practice as they help ensure a level playing field. For years, this group has blocked support for sustainable coal projects; the latest effort would have placed more oil and gas restrictions on the border as well.

Export credit agencies in OECD countries finance an average of $41 billion a year in oil and gas projects, according to data compiled by environmental activists.

Article content

Even in the US, that money has continued to flow, despite Biden’s promises to cut it. Seven days into his presidency, Biden ordered American organizations to “promote the elimination of global financing of carbon-intensive fossil fuels.” And in December 2021, the US signed an international declaration committing to “end new direct public support for the international fossil fuel energy sector,” without limited conditions.

Just this week, the US export bank will vote to approve a $527 million loan to help Guyana develop a natural gas project. Corporate beneficiaries identified by the bank include energy company Lindsayca Inc., engineering firm CH4 Systems and Exxon Mobil Corp.

Environmentalists want the administration to continue trying to reach an OECD agreement. The talks plan to continue with trade messages until early January, at least, one of the officials said.

“The Biden administration needs to use these last few weeks to increase pressure on Korea and Turkey, which is the bottom line,” said Kate DeAngelis, director of global financial programs for the environmental group Friends of the Earth. “It’s not over until Trump officially takes office. Failure to continue fighting and negotiating will be a huge loss to Biden’s legacy and climate. “

Article content