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 at the 2021 Glasgow climate talks when it joined Saudi Arabia and Russia in opposing a draft commitment that countries “accelerate the phasing out of coal and subsidies for fossil fuel”. This ultimately led to a weakening of the text, and came six years after it refused to agree to phasing out fossil fuel subsidies at the 2015 Paris climate talks.

Hunter Power Project

In a rare example of expanding public infrastructure, in May 2021 the Federal Government announced a $600 million investment in a gas-fired power station at Kurri Kurri, NSW. Aside from being a polluting form of power generation contributing to climate change, the plant is only expected to operate at 2% of its full capacity across the year, while experts have said the project makes little commercial sense, and a Victoria University analysis found the project had no prospect of generating enough revenue to justify its cost. There are also fears the project would incentivise Santos to proceed with its destructive Narrabri coal seam gas field.

Future Fund: investing your taxes in climate-wrecking fossil fuels

Australia’s Future Fund was 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 for Adani’s Carmichael coal mine. In addition to this, Adani Ports has had business dealings with the Myanmar military, who overthrew Myanmar’s democratic government in 2021. Adani Ports is not a worthy recipient of Australian taxpayer’s money.

The Future Fund also invests in other fossil fuel companies domestically and overseas. This includes North American oil and gas pipeline company TC Energy, whose planned Keystone XL pipeline was revoked by the Biden administration in 2021 after a 12-year campaign from Native American tribes, environmental groups, and landowners.

Future Fund’s domestic investments include Australia’s largest gas producer Woodside Energy, and coal mining company South32.

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 details of its dirty deals often remain secret until it’s too late.

In total, Export Finance Australia provided more than $1.5 billion in finance to fossil fuel projects between 2009 and 2020, about 80 times the amount it spent on renewables, according to Jubilee Australia.

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.

Just some of the dirty deals the agency have been involved with include financing for the Wiggins Island Coal Export Terminal (WICET) in September 2018, owned by a consortium of coal miners including Glencore. 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. It also provided AU$25 million to Senex Energy for the development of a climate-wrecking gas project in Queensland, which supplies the destructive Gladstone LNG export facility.

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 provided more than $1.5 billion in finance to fossil fuel projects between 2009 and 2020, about 80 times the amount it spent on renewables, according to Jubilee Australia. 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 31 October 2021, it is estimated that AU$197.5 million of this loan remains outstanding.

 In 2019, Woodside sought funding from Export Finance Australia for an oil field off the coast of Senegal which would produce 100,000 barrels of oil per day for 20 years, and threaten the food security of communities – especially women – along the coastline. After people-powered opposition against the project from the likes of ActionAid, Export Finance Australia announced it would not fund the project.

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).

It is 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.

See also:

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: