COP26: 20 countries pledge to end financing for fossil fuel projects abroad

• The United States signed a deal to seize international financing of fossil fuel projects but have not joined PPCA to quit coal

• The International Energy Agency (IEA) said to achieve a net-zero emissions economy by 2050, investments in new unabated coal plants must be stopped

In a push to phase out fossil fuels, 20 countries, including the United States, have agreed to end financing for fossil fuel projects abroad in a deal announced Thursday at the COP26 climate summit.

The United Kingdom, Canada, Italy, Switzerland, and New Zealand are among the few to sign the agreement to “end new direct public support for the international unabated fossil fuel energy sector by the end of 2022, except in limited and clearly defined circumstances that are consistent with a 1.5°C warming limit and the goals of the Paris Agreement.”

Seizing finance for all kinds of fossil fuels

Although several nations had already agreed to end international financing for coal, the climate summit’s “energy day” saw countries coming forward to sign the first of its kind deal to include oil and gas projects as well.

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The countries would stop spending tax dollars on drilling, power plants and other projects by international development banks and other publicly funded institutions starting next year, a move the group said would divert $18 billion a year toward clean energy.

“The presumption has to be that direct finance and public finance towards energy in developing countries around the world has to be in the clean and green area,” John Morton, climate counselor for the U.S. Treasury Department, said.

Pledge to stop using coal

The pledge comes following seven countries and 21 parties, including banks and cities, pledged to end the use of coal and joined Powering Past Coal Alliance (PPCA), totaling 48 members.

Also Read: COP26: 28 nations pledge to quit coal, U.S., China, India skip out alliance

Among the new members, Poland is Europe’s largest coal producer and the second-largest consumer of coal in the region, while Singapore is the first Asian country to join the PPCA.

Hoping for ‘domino effect’

An annual report published by the UN Environment Programme said 15 major fossil fuel-generating countries will produce about 110% more coal, oil, and gas in 2030 than what would be necessary to limit warming to 1.5 degrees Celsius above pre-industrial levels.

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“Ending international finance for all unabated fossil fuels is the next critical frontier we must deliver on,” said British Energy Minister Greg Hands. “We must put public finance on the right side of history.”

“We hope this will lead to the same domino effect that we’ve seen with coal finance,” said Laurie van der Burg, a global public finance campaign manager at the nonprofit Oil Change International.

Picture Credit: Business Line