Australia’s export credit agency gave 80 times more to fossil fuel projects than renewables
Australia’s export credit agency provided more than $1.5bn in finance to fossil fuel projects between 2009 and 2020, about 80 times the amount it spent on renewables, according to a new report.
The research, by Jubilee Australia, examined transactions by Export Finance Australia (EFA) – previously known as the Export Finance and Insurance Corporation – finding it had provided between $1.57bn and $1.69bn in financing to coal, oil and gas projects, including refinancing.
Over the same 11-year period, covering the hottest years on record globally, it provided $20m in support to renewables projects.
The Jubilee Australia report said because the agency operated with limited transparency it was challenging to get accurate data for all of the projects financed, signalling the total dollar figure that went to fossil fuel projects could be even higher.
The organisation reached its findings by working through the transaction list the EFA publishes each year and its annual reports.
It finds some of the financing went to directly to projects – such as a $254m loan to Santos in 2011-12 for its Gladstone LNG project. In other cases the money went to companies that provide services to the fossil fuel industry, in
cluding engineering and construction.
Jubilee Australia said that refinancing of some projects, including the Ichthys LNG project in north-west Australia, had “disturbingly” resulted in an increase in lending to fossil fuels in recent years, after it reached a low of $192m in 2016-17.
“As much of the world moves away from financing fossil fuels, Australia could be one of the few countries still willing to finance new fossil fuel projects,” Luke Fletcher, Jubilee Australia’s executive director, said.
“Over the last decade, more than a billion dollars of money backed by Australian taxpayers has gone to finance fossil fuel projects here and overseas.
“Some of the most significant projects have lost money or risk becoming stranded assets.”
The Morrison government has been under scrutiny for giving taxpayer support to fossil fuel projects.
Last week it was criticised for using the Northern Australia Infrastructure Facility to provide a loan for the development of the $900m Olive Downs mine in Queensland’s Bowen Basin.
Labor, the Greens and crossbench senators also recently combined to disallow a controversial instrument written by the energy minister, Angus Taylor, to allow the Australian Renewable Energy Agency to invest in a broader range of technologies including some using fossil fuels.
“The big issue I think Australia is facing is that global capital is belatedly recognising the stranded asset risk across the entire fossil fuel industry value chain,” said Tim Buckley of the Institute for Energy Economics and Financial Analysis.
“The Australian government is trying to hold back the tide.”
The minister for trade, tourism and investment, Dan Tehan, said Export Finance Australia had a mandate to provide commercial financing to projects that supported “viable Australian export trade where the private market is unable or unwilling to do so”.
He said funding decisions were based on independent assessment and subject to oversight and approval from the agency’s board.
Tehan said the EFA assessed transactions on a case-by-case basis and it did not favour certain types of projects over others.
“Between 2015-16 and 2019-20, EFA financing of all energy projects accounted for less than 5% of the total finance provided by EFA,” he said.
But Alia Armistead of The Australia Institute said the Productivity Commission had in the past noted only a small number of large companies were beneficiaries of financing from the agency.
She said Australia’s continued underwriting of fossil fuel exports with public money was “alarming”.
The progressive thinktank released a report in May that examined 2020-21 budget items for the federal and all state and territory governments that were related to fossil fuels, finding governments were providing the industry with $10.3 billion worth of spending and tax breaks.
Armistead said Jubilee Australia’s research was an other part of that picture.
“The world’s appetite for fossil fuels is waning, yet alarmingly this report shows that Australia is determined to keep underwriting fossil fuels for export with public money, even when there’s no market for them,” she said.