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COP26 announcement

20 nations to halt overseas fossil fuel funding

Oil-demonstrators-at-Hydro

Demonstrators against oil outside the COP26 summit

At least 20 countries and financial institutions are expected to announce at the COP26 summit that they will halt all financing for fossil fuel development overseas.

The joint statement, due to be made on Thursday morning, will be seen as a huge message of intent in the transition to clean energy.

The UK, Denmark and the US are said to be among those signed up alongside the European Investment Bank.

Diverting their funding from fossil fuels to low-carbon efforts will generate an estimated $8bn a year around the world for clean energy, according to The Guardian. The agreement will prevent the funding of any fossil fuel development, including gas.

It is reported, however, that China and Japan, two big funders of fossil fuel development around the world, will not support the initiative.

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The countries involved will also be able to continue developing their own fossil fuel resources at home, including oil and gas fields – a move that leaves open the opportunity to continue developing fields in the North Sea and off the English north west coast.

The UK will also be able to press ahead with funding a controversial gas field in Mozambique, because that project is already in the pipeline and the latest initiative covers only new investments.

Funding for fossil fuels from private sources will also not be included which will be a relief to big oil and gas firms which argue that they need to continue producing oil and gas to pay for investment in clean energy.

Shell’s CEO Ben van Beurden said in an interview today that the company can transition to net zero by 2050, but will need the cash from its oil and gas business to pay for it.

“At this point in time [the cash] comes from our legacy business,” he said.

James Alexander, chief executive of UK Sustainable Investment and Finance Association, told the Edinburgh Chambers of Commerce’s COP26 summit that urging institutions to divest their oil and gas holdings was wrong.

“Selling these assets just means it becomes someone else’s problem,” he said. “Divestment is not something we want to see,” he added, arguing that holders of these assets needed to work with companies, not against them.

Malcolm Forbes-Cable, vice president, energy consulting, at consultancy Wood MacKenzie, told the same summit: “80% of energy demand comes from hydrocarbons. It is an inconvenient truth and we have to manage our way through it.”

Responding to the expected statement from the 20 nations at COP26, Tasneem Essop, executive director at Climate Action Network International, said: “Shutting fossil fuels down is critical for tackling the climate crisis.

“This announcement could be a critical step in the right direction, especially given the weak update from the Multilateral Development Banks on their Paris Alignment efforts earlier this week.

“All public money needs to be urgently redirected into a just energy transition that ensures clean universal energy access for communities in the Global South and support for coal, oil, and gas workers and communities — without saddling countries with any further debt.”

Laurie van der Burg, global public finance campaigns co-=manager at Oil Change International, said: “Of course the devil will be in the details, but if the statement on ending public finance for fossil fuels and shifting support to clean energy that will be launched tomorrow is truly as ambitious as it is said to be, the signatories are finally doing what’s most logical in a climate emergency: stop adding fuel to the fire and shift dirty finance to climate action.

“Only this way can we avoid the worst climate crisis scenarios. We need to see much more of this to help deliver and exceed climate finance promises and support real solutions that meet community needs — particularly in the Global South. Other countries and institutions must follow suit.” 

Collin Rees, US program manager at Oil Change International, added:  “If these reports are true, the United States and other signatories are finally doing what’s logical in a climate emergency — recognising the need to stop pouring fuel on the fire.

“Shifting dirty oil and gas finance to truly clean energy is the only way to avoid the worst impacts of the climate crisis.

“We need much more of this real climate leadership from President Biden — both at home and abroad — to meet and exceed finance promises and support communities in the US and the global south. I look forward to Biden’s team engaging with other institutions to join this initiative and end international support for fossil fuels once and for all.”



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