Public finance for fossil fuels
The Australian government helps the climate-wrecking fossil fuel industry grow by sinking taxpayer funds into oil and gas companies and projects. It has long put the interests of big polluters ahead of our environment, climate and health – most infamously refusing to sign an agreement at the 2015 Paris climate talks to phase out fossil fuel subsidies unless concessions were made.
Fossil fuel subsidies are partly given through the relatively obscure 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).
EFIC: spending your taxes on dirty deals
Despite being a Commonwealth agency, EFIC 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.
In April 2019 the Coalition government rushed through a bill giving EFIC increased powers and funding. The move was condemned by climate and development climate agencies as “fast-tracking“ taxpayer funding for fossil fuel projects and undermining climate action in the Pacific region.
Companies likely to benefit from this include Australia’s biggest fossil fuel political donor in 2018, Woodside Petroleum. It’s currently asking for money to explore an oil and gas field off Senegal’s coast.
Dragging our heels on climate progress
Back in November 2015 finance ministers from the OECD group of wealthy nations agreed to stop financing the highest polluting new coal power plants.
This deal, originally proposed by Japan and the US, ensured all new coal plants would only be eligible for OECD government funds if they use the latest technology and emit the lowest emissions possible, and if cleaner alternatives are unviable. 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 rapidly develop, we need to make sure their rising energy demands are met with clean, renewable sources. The OECD deal fell short of what’s truly needed – a plan to completely phase out all government fossil fuel subsidies in the 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.