Public finance for fossil fuels
The Australian government continues to help the fossil fuel industry expand by using public funds to finance fossil fuel companies and projects. Its recalcitrance at the Paris climate talks saw our government officials refuse to sign an agreement to phase out fossil fuel subsidies, once again putting the interests of big polluters ahead of our environment, climate and health.
Fossil fuel subsidies are partly given through the Export Finance and Insurance Corporation (EFIC) — our national export credit agency (ECA) — while further public financing is provided to fossil fuels through our role in several international finance institutions (IFIs).
Dragging our heels on climate progress
In November 2015 finance ministers from the OECD group of wealthy nations reached an agreement to stop financing the highest polluting new coal power plants.
Originally proposed by Japan and the US, the deal ensured that all new coal plants would only be eligible for OECD government finance if they have the latest technology and lowest emissions possible, and if cleaner alternatives are unviable.
However, Australia had to be dragged kicking and screaming into the deal, only agreeing after watering it down to allow some small, higher emissions plants to be built in developing countries.
As our close neighbours in Asia continue to rapidly develop in the coming years, we need to ensure their rising energy demands are met with clean, renewable sources. The OECD deal fell short of what is truly needed – a clear plan to completely phase out all government subsidies to fossil fuels in the very near future.
Read more about the original OECD deal here. Also see Market Forces’ September 2018 complaints against three Japanese banks for breaching the OECD Guidelines for Multinational Enterprises through their conduct in financing and considering finance for specific coal-fired power projects in Vietnam.