FOR IMMEDIATE RELEASE
Contact:
Adam McGibbon, adam.mcgibbon [at] priceofoil.org
Sweden restricts worldwide oil and fuel finance to ship on local weather dedication
On the COP26 United Nations Local weather Convention in Glasgow, 39 international locations and establishments signed as much as the Glasgow Assertion, committing themselves to ending “new direct public assist for the worldwide unabated fossil gas vitality sector by the tip of 2022, besides in restricted and clearly outlined circumstances which might be in keeping with a 1.5°C warming restrict and the objectives of the Paris Settlement.” The initiative has the potential to shift $39 billion a yr out of fossil gas initiatives and into clear vitality if international locations maintain their guarantees.
Because the deadline for implementing the Assertion looms, the Swedish export credit score companies, SEK and EKN, have launched an up to date coverage. A previously-released coverage aligned Swedfund – the Swedish growth finance establishment – with the Glasgow Assertion.
SEK and EKN’s new coverage ends nearly all assist to fossil fuels by thirty first December 2022, with some restricted exemptions:
- Gasoline-fired energy vegetation, new oil or fuel extraction and oil refineries will nonetheless be supported if the mission / firm “has documented and lifelike transition plans consistent with the Paris Settlement’s 1.5-degree goal, e.g. outfitted with carbon seize and storage (CCS) or equal emissions discount applied sciences” OR if “The transaction refers to substantial environmental or security enchancment measures whereas no enlargement of the oil or fuel operation.”
- Till thirty first December 2022, gas-fired energy vegetation could be supported in “international locations with massive growth wants or in international locations the place the exporter or purchaser can present that the mission is a part of reconstruction after battle or battle.”
Primarily, which means that the Swedish coverage, though an enchancment, doesn’t rule out assist for oil exploration and extraction as clearly because the best-practice UK and Denmark insurance policies. Nonetheless, in observe, if Sweden’s requirement for a 1.5°C transition plan is applied with integrity and good religion, this could imply that no new ensures could be issued for such initiatives. In response to the Worldwide Power Company, to keep up a 50% probability of limiting international warming to 1.5°C, there could be no investments in new coal, oil or fuel fields. Different analysis reveals that on high of ending investments in new fossil gas provide, 40% of already developed oil and fuel reserves have to be left unextracted. The same rationale applies to new gas-fired energy vegetation: each the manufacturing and use of fuel must be quickly diminished to restrict international heating to 1.5°C and the dedicated emissions from current vitality infrastructure (together with energy infrastructure) already jeopardize the 1.5°C goal. The excellent news is that clear and reasonably priced options to gas-fired energy exist and may higher ship on vitality entry wants. In 2020, the UN Sustainable Power for All initiative really useful that “financing of fossil gas initiatives as a way of closing the vitality entry hole needs to be terminated,” noting that they’re not the simplest technique of offering electrical energy entry.
Whether or not these initiatives will really be dominated out is determined by how EKN and SEK consider 1.5°C transition plans, which leaves some uncertainty within the Swedish place.
It’s regarding that EKN is contemplating offering export finance assist to CTT Mozambique, a mission to construct a gas-fired energy plant within the east African nation. If EKN intends to behave as a local weather chief and take heed to the science, this mission can’t be supported.
Amid all this, a hopeful signal is that EKN and SEK’s ‘Scientific Local weather Council’ have made public statements that ought to present the Swedish export credit score companies with ample purpose to not exploit the loopholes within the coverage. The advisory council famous that “the worth right now for coal, oil and fuel makes new fossil-based investments exhausting to justify based mostly on a strict monetary calculation,” that “pure fuel shouldn’t be seen as a transition gas” and that “Generally, it isn’t doable to justify new investments in fossil-based electrical energy and vitality manufacturing. These are lengthy funding cycles which end in lock-in results, which in flip undermine the chances to achieve the 1.5-degree goal and in addition dangers the funding turning into a “stranded asset”.
As a member of the Export Finance for Future (E3F) initiative, Sweden should use its diplomatic capital to make sure that all different E3F members implement the Glasgow Assertion and current their up to date insurance policies on the upcoming E3F Summit. This fashion E3F members can construct momentum in the direction of COP27, guarantee different Glasgow Assertion signatories observe go well with and meet their agreed finish of 2022 deadline. [This leadership is vital to mitigating the climate crisis as of all public finance institutions ECAs are still the worst performers when it comes to Paris Alignment. The G20 ECAs provide 11 times as much export support to fossil fuel projects (USD 40.1 bn/yr) as for clean energy (USD 3.5 bn.yr)].
Though E3F was designed to “harness public export finance as a key driver within the struggle towards local weather change” and all members signed onto the Glasgow Assertion, the coalition isn’t but on monitor. The vast majority of its members haven’t but up to date their insurance policies consistent with the Glasgow Assertion, and E3F itself has not but made ending worldwide public finance for fossil fuels a prerequisite for becoming a member of the initiative. Sweden should use its E3F membership to lift the bar, urging all different E3F members to implement the Glasgow Assertion by the E3F Summit in an effort to construct momentum to COP27, and make fossil-free ECAs insurance policies a requirement for brand spanking new members to hitch the initiative going ahead.
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