ENVIRONMENTAL DEFENCE and OIL CHANGE INTERNATIONAL
Canada and Other G20 Nations Sending Billions in Finance to Fossil Fuels
New report provides first-ever analysis of public financing for energy projects
Canada sends an average of at least $3 billion per year in government-backed finance to oil, gas, and coal producers around the world, according to a new report by Oil Change International, Friends of the Earth U.S., the Sierra Club, and WWF European Policy Office. The report recommendations are endorsed by Environmental Defence and AboveGround.
Canada’s $3 billion in annual public finance for fossil fuels is large relative to the size of its economy. The report identified just $171 million in annual Canadian public finance to clean energy.
While the report covers a period that mostly precedes the Trudeau government (2013-2015), it notes that trends in Canada’s public finance through 2016 appear largely consistent with this data, with billions of dollars in new support for oil and gas flowing from Canadian public finance institutions — including up to $1 billion to Enbridge, a key player in the Dakota Access Pipeline, and $200-$450 million to TransCanada, the company behind Keystone XL, last December.
Almost all of the Canadian public finance for energy covered in the report is from Export Development Canada (EDC). EDC doesn’t disclose the actual amount of each transaction, but rather a range (eg., $100-$250 million), and the report authors used the lowest number in the range for their calculations. That means the total could actually be much higher than $3 billion.
“Trudeau needs to put his money where his mouth is when it comes to the clean energy transition. To stand up to Trump’s climate denial and meet Canada’s commitments under the Paris Agreement, Canada should stop propping up the outdated fossil fuel industry with public money,” says Alex Doukas, Senior Campaigner at Oil Change International and one of the report’s authors. “Trudeau must resist Trump’s attempts to dismantle international cooperation on the climate crisis. The best climate science points to an urgent need to transition to clean energy, but public finance for fossil fuels drags us in the opposite direction. We must stop funding fossils.”
“Canada must stop using billions in public money to develop fossil fuel projects that will heat the planet beyond safe limits. This is totally inconsistent with the Canadian government’s support for the Paris Agreement and its goal to avoid dangerous levels of climate change,” says Keith Brooks, Programs Director, Environmental Defence. “Instead of funding polluting fossil fuels, Canada should greatly increase its funding of clean energy projects to eliminate carbon emissions by mid-century.”
Utilizing data from Oil Change International’s Shift the Subsidies database, the groundbreaking report analyzes support coming from public finance institutions — those institutions controlled by or backed by governments, such as export credit agencies and development finance institutions. It looks specifically at provision of grants, equity, loans, guarantees and insurance by government-backed institutions for international and domestic fossil fuel production. It presents a detailed picture of public finance for all energy — clean, fossil fuel, or otherwise.
The report, which looks at public finance for energy coming from G20 countries, finds that collectively, they provide nearly four times more public finance to fossil fuels than to clean energy. In total, public fossil fuel financing from G20 countries averaged some $71.8 billion per year, for a total of $215.3 billion in sweetheart deals for oil, gas, and coal over the 2013-2015 timeframe covered by the report. Fifty percent of all G20 public finance for energy supported oil and gas production alone. In contrast, just 15 percent went to support clean energy, The study looked at public finance institutions such as export credit agencies, development finance institutions, and multilateral development banks.
The best available science also indicates that at least 85% of fossil fuel reserves must remain in the ground to meet the aims of the Paris Agreement on climate change. Yet of the $71.8 billion in fossil fuel finance, $13.5 billion goes to activities that supercharge the exploration phase for even more unburnable reserves of oil, gas, and coal.These findings directly contradict the goals espoused in the Paris climate agreement — touted by these same governments — which specifically calls on countries to align financial flows with low-emission development.
The report, entitled “Talk is Cheap: How G20 Governments are Financing Climate Disaster,” can be found at this link. In addition to the authoring organizations, it has also been endorsed by Environmental Defence (Canada), CAN-Europe, Urgewald (Germany), Re:Common (Italy), Legambiente (Italy), FOE-Japan, Kiko Network (Japan), JACSES (Japan), and KFEM (Korea), and its recommendations have been endorsed by AboveGround (Canada).
The report shows that public financing for fossil fuels has a three-pronged effect on efforts to address climate change. First, it acts as a “negative carbon price” that helps to subsidize and incentivize more fossil fuel production. Second, it helps drive high-carbon lock-in, making the transition to clean energy more difficult and costly. Third, this public finance makes uneconomical dirty energy economical, thereby enabling “zombie energy” projects that would never even begin operating without such support.
David Turnbull, Oil Change International, firstname.lastname@example.org, +1-202-316-3499
Alex Doukas, Oil Change International, email@example.com, +1-202-817-0357
Allen Braude, Environmental Defence, firstname.lastname@example.org, +1-416-323-9521 ext 247, or +1 416-356-2587 (cell)