Public finance for fossil fuels
The Australian government lends and invests taxpayer money to many different companies and projects, including coal, oil and gas operations. It has long put the interests of big polluters ahead of our environment, climate and health, as was clearly displayed when it refused to sign an agreement at the 2015 Paris climate talks to phase out fossil fuel subsidies unless concessions were made.
Future Fund: investing your taxes in climate-wrecking fossil fuels
Established by the Australian Government in 2006 to “[invest] for the benefit of future generations of Australians”, it was revealed in late 2020 that Australia’s Future Fund had $3.2 million invested in Adani Ports, the company responsible for funding rail infrastructure from the Carmichael coal mine.
The Future Fund also invests in dirty fossil fuel companies domestic and overseas. This includes North American oil and gas pipeline company TC Energy, whose highly opposed Keystone XL pipeline is set to have its permit revoked by the Biden administration (as of Jan 2021).
Other investments include Australia’s largest producer of climate-wrecking gas Woodside Energy, as well as Australia’s largest gas pipeline company APA Group.
Export Finance Australia
Export Finance Australia (previously the Export Finance and Insurance Corporation) provides concessional loans to fossil fuel companies and projects.
Despite being a Commonwealth agency, Export Finance Australia is not constrained by the Paris Agreement and refuses to disclose how it considers climate risk. It is also exempt from FOI laws, so the detail of its dirty deals often remains secret until it’s too late.
Multinational commodities trader Glencore along with a consortium of coal miners, received public finance from Export Finance Australia to refinance the Wiggins Island Coal Export Terminal (WICET) in September 2018. While Export Finance Australia had previously provided a guarantee for WICET, this time around it provided a significant boost to the coal terminal by also lending nearly US$90 million.
In April 2019 the Coalition government rushed through a bill giving Export Finance Australia increased powers and funding. The move was condemned by Australia’s development community and others as “fast-tracking” taxpayer funding for fossil fuel projects and undermining climate action in the Pacific region.
How Export Finance Australia works
Export Finance Australia is Australia’s export credit agency – a semi-governmental financial institution that provides loans, insurance and guarantees to support projects that hold some national value, and the international operations of local companies. ECAs often lend far more money than commercial banks and offer long-term, low-interest debt that makes a project much more bankable.
In September 2017, trade minister Steven Ciobo overturned a ban on Export Finance Australia’s support for ‘onshore resource projects’ including coal mines. He reportedly did not consult his department on the decision. Six months later, in March 2018, Export Finance Australia emerged as a potential funding vehicle for Adani’s Carmichael coal project and has not ruled itself out of enabling Adani’s Galilee coal plans.
Export Finance Australia has a long and chequered record of backing fossil fuels. Loans include US$150 million to the massive Ichthys LNG project off the Northern Australian coast in 2012, followed by a US$114 million refinancing for that project in June 2020. It also lent US$350 million to the dirty PNG LNG project in 2009 and, as of 30 June 2020, it is estimated that A$238.3 million of this loan remains outstanding.
In 2019 it emerged that Australia’s largest producer of climate-wrecking gas, Woodside Energy, had asked Export Finance Australia for taxpayer funds to build an oil and gas field off the Senegalese coast. Woodside is one of Australia’s biggest fossil fuel political donors.
International Financial Institutions
Australia also holds shares in and plays an important role in two IFIs: the World Bank Group and the Asian Infrastructure Investment Bank (AIIB).
We are one of 57 founding members and the sixth largest shareholder in the AIIB. All up, Australia has an exposure of up to $3.7 billion in the bank. This public money can be used to fund a raft of infrastructure-related projects through the bank.
When it was first set up, AIIB looked set to impose even looser environmental benchmarks for project lending than other IFIs, with no mention of emissions caps or avoidance of coal power generation in its Draft Environmental and Social Framework document.
As of July 2020, 54% of AIIB’s energy investments in its four-and-a-half years since launching had backed fossil fuels. This stands in sharp contrast to just 24% of investment in renewables.
In September 2020, AIIB’s president promised to stop financing “any projects that are functionally related to coal”, but failed to announce Paris-aligned restrictions on funding for oil and gas.
Private Infrastructure Development Group
A report by Global Witness has uncovered millions of dollars in government financing for fossil fuel projects in some of the world’s poorest countries. The Australian Government is one of six government investors in the little-known Private Infrastructure Development Group (PIDG), which continues to fund oil and gas projects, including gas-fired power plants. Funding new fossil fuel capacity runs against the Paris Agreement commitments that each of PIDG’s funding governments say they support.
The report called upon government backers of PIDG to push the investment group to adopt a fossil fuel-free policy in time for the UN Climate talks planned for November 2020 in Glasgow. In December 2020, the UK announced it would end overseas finance for fossil fuel projects. Australia is yet to do the same.
Tell Treasurer Josh Frydenberg: End polluter handouts!
National tax-based subsidies that encourage fossil fuel production and consumption add up to $12 billion every year.
Find out more about direct contributions and handouts made to the fossil fuel industry: