How G20 Governments are Financing Climate Disaster
The G20 nations provide four times more public financing to fossil fuels than to clean energy, according to a new report from Oil Change International’s Alex Doukas
D. LASCARIS: This is Dimitri Lascaris for The Real News.
Climate change is said to be high on the agenda as the leaders of the G20, the nations with the worlds biggest economies, gather in Hamburg, Germany on July 7th and 8th. Leading up to the G20 Summit, German leader Angela Merkel and French President Emmanuel Macron have not been shy about criticizing President Donald Trump’s stance on climate change. President Trump has alarmed many by withdrawing the United States government from the Paris Climate Accord to limit the global temperature increase to well below two degrees Celsius.
But a new report called, “Talk is Cheap: How G20 Governments are Financing Climate Disaster” shows that despite the lip service on fighting climate change, G20 governments are providing nearly four times more public finance to fossil fuels than to clean energy.
Joining us from Washington, D.C. is the author of the report, Alex Doukas. Alex is a senior campaigner at Oil Change International. His work focuses on ending international subsidies and public finance for fossil fuels, and shifting public resources toward building a clean energy future. Previously, Alex worked with the World Resources Institute where he focused on making international climate finance more effective.
Thanks for joining us again, Alex.
ALEX DOUKAS: Thank you, Dimitri. Good to be on.
D. LASCARIS: I’d like to start with the broad strokes of your analysis. According to that analysis, what is the total amount of fossil fuel subsidies among G20 states? And which of those states are the principal culprits in terms of subsiding fossil fuels?
ALEX DOUKAS: Looking across all the G20 governments, we’re talking about around $72 billion per year on average in fossil fuel finance; that’s finance for oil, gas, and coal production. It’s a huge amount of money. Again, this is on top of the national subsidies that all of these governments provide to their domestic oil, gas and coal industries. Most of this public finance, which is coming from taxpayer-backed to government-backed public finance institutions, is going towards international fossil fuel projects to support a network of oil, gas and coal infrastructure all over the planet.
So of that $72 billion, which is about four times more than they’re providing for clean energy through those same public finance institutions, the worst offenders are Japan, China and Korea, followed by the United States and Germany. So regionally, a strong Asian presence in public finance for fossil fuels, and then followed by the United States. And the years we look at in the report were under Obama, so I would expect things to get even worse under Trump.
And then Germany, and then not much further down the list is Canada as well, another supposed climate leader. So there’s a lot more that some of these countries that are talking a big game on climate change could be doing.
D. LASCARIS: And if you could give us some concrete examples, by what means are these governments funneling taxpayer funds to the fossil fuels industry?
ALEX DOUKAS: In the Japanese case, for example, they funnel a lot of money to fossil fuel infrastructure through sweetheart deals via their what are called “export credit agencies.” So they have a couple of export credit agencies that provide sort of loans at softer terms than the market would provide, or that provide loan guarantees in case a project goes south, that gives other investors the encouragement and backing to come in. So, some of these projects might not ever happen without that finance.
In other cases, it’s sort of more broadly corporate finance; it’s not necessarily for a specific project. But I’ll give you recent examples from Canada. They’ve actually provided finance for TransCanada, for companies building hotly contested pipelines like Keystone XL, and that’s even since Trudeau, the current Prime Minister of Canada, took office.
So sometimes it’s project focused. Most of the finance that we see is project finance. Other times it’s sort of corporate lending. But in all of these cases, it’s from government-backed public finance institutions. Again, taxpayer-backed money being poured down the drain into these fossil fuel infrastructure projects at the time when we need to be transitioning away from fossil fuels, not doubling down on them.
D. LASCARIS: And on the other side of the coin, though, in terms of investment in renewable energy, what is the total amount of public finance for renewable energy you’ve found across the G20? And who are the leaders in that regard?
ALEX DOUKAS: It’s under $20 billion, and the leaders in that regard are some of the biggest providers of public finance for energy, are also … who are providing the most for fossil fuels are also providing the most for clean energy. But because of the giant disparity between the fossil fuel finance totals and the clean energy totals, their fossil fuel finance generally still tremendously outstrips their clean energy finance.
So Japan, for example, is providing considerable … several billion dollars a year on average in finance for clean energy, which shows that they actually can finance these types of infrastructure through public finance institutions, and they could be doing more. So I think that’s an encouraging story in some ways, is that Japan doesn’t need to be dumping all of this public finance into fossil fuel infrastructure. They already know how to do it for clean energy; they just need to be scaling that up while they scale down the fossil fuel finance.
Germany is also providing still more fossil fuel finance than they are clean energy finance, but it’s close. And likewise, France is actually doing quite well as a provider of finance for clean energy. So those are some of the countries that are providing significant amounts of public finance for clean energy at the moment.
D. LASCARIS: Now recently, particularly after President Trump’s announcement that he was going to withdraw the United States from the Paris Climate Accord, there’s been a lot of talk about China filling the leadership void. In light of what you’ve found in terms of Chinese subsidization, the Chinese government subsidization of fossil fuels, its investment in renewable energy, overall trends in terms of its emissions, its use of coal, how would you rate that assessment that it is filling the leadership void and stepping up to the plate as the United States withdraws from a leadership role in the fight against climate change?
ALEX DOUKAS: I think there’s a bit of a sequencing issue with the data and the report versus steps that China’s taken recently. So the report looks at data from fiscal years 2013 to 2015 in each of the countries, so some of China’s more recent leadership actions aren’t really reflected in the report.
That said, the report doesn’t reflect very well on China’s public finance. There’s a lot of public finance for fossil fuels, not a lot for clean energy. I will say that the data for China for its public finance institutions was a bit shaky because they’re not very transparent. But the picture that we have, certainly, I think is in the right order of magnitude in fossil fuel finances; almost $14 billion per year on average, where clean energy public finances is pretty negligible.
That said, the China-led Asia Infrastructure Investment Bank, which is kind of seen as a competitor in many ways to the World Bank, for example, and other multilateral development banks that are Western led, recently announced that they have no coal projects in their pipeline, and one of their vice-presidents also said that he didn’t envision the bank ever financing a coal project.
So I think that’s significant. I think China’s taking a lot of domestic steps to curtail coal mining and coal-fired power production. In January, they announced over 100 coal plants that were planned and some were under construction already, were going to be canceled. So, some pretty big steps domestically, and hopefully that international action ratchets up to reflect the void that they claim they want to fill when it comes to an absence of U.S. leadership on climate change.
D. LASCARIS: And lastly, what are some of the specific, the principal specific recommendations that you make in your report?
ALEX DOUKAS: Broadly speaking, what we want to see is G20 leaders put their money where their mouth is. Because talk is cheap, and simply saying that Donald Trump isn’t good on climate change and we think he should be better, that’s not enough. I mean, of course, G20 leaders should be uniting to say Donald Trump is in climate denial and we don’t share that view, and we support the Paris agreement and moving beyond the Paris agreement to even more ambitious action, but they need to do more than just say that. The bar can’t be, “Well, we’re not Donald Trump.” I mean, that’s not an acceptable barre for them to clear in order to call themselves climate leaders.
So what we’re asking them to do is to commit to phasing out all fossil fuel finance from these public finance institutions no later than 2020. That’s sort of the key “ask” and the center of this, and it’s something that we’ve also asked governments to do in the G20 for their fossil fuel subsidies domestically, to phase those handouts to oil, gas and coal companies out no later than 2020 in line with the 2009 commitment that they made.
I mean, it’s now 2017. It’s time that we move on and start acting on these commitments. And that’s what we’re calling for before the G20 Summit coming up this weekend.
D. LASCARIS: Well, this has been Dimitri Lascaris speaking to Alex Doukas of Oil Change International about a new report showing massive subsidization of fossil fuels in the G20 states, even in the face of a global climate emergency. Thank you very much for joining us, Alex.
ALEX DOUKAS: Thank you, Dimitri. I appreciate it.
D. LASCARIS: And this has been Dimitri Lascaris for The Real News.