SA is still funding fossil fuels

SHEREE BEGA

The world’s biggest economies adopted the Paris Agreement in 2015 to combat climate change but have continued to bankroll $77 billion in public finance to “prop up” the fossil fuel industry.

A new report, Still Digging: G20 Governments Continue to Finance the Climate Crisis, finds that G20 countries have been pouring this amount into oil, gas, and coal projects through their international public finance institutions, more than three times what they are providing for clean energy.

South Africa provided at least R2.2bn a year in trade and development finance projects for coal projects between 2016 and 2018, says the report by Friends of the Earth U.S. and Oil Change International.

But “poor transparency” from the Development Bank of Southern Africa (DBSA), the Industrial Development Corporation (IDC) and the Export Credit Insurance Corporation of SA means support for oil, gas and coal is “likely higher” than the R2.2bn figure on record.

With the health and livelihoods of billions at immediate risk from Covid-19, governments around the world are preparing public spending packages of a magnitude they previously deemed unthinkable.

“In normal times, development finance institutions, export credit agencies and multilateral development banks (MDBS) already had an outsised impact on the overall energy landscape and more capacity than their private sector peers to act on the climate crisis. In the current moment, their potential influence has multiplied, and it is imperative that they change course.

“The fossil fuel sector was showing long-term signs of systemic decline before Covid-19 and has been quick to seize on this crisis with requests for massive subsidies and bailouts. We cannot afford for the wave of public finance that is being prepared for relief and recovery efforts to prop up the fossil fuel industry as it has in the past.”

But business as usual will “exacerbate the climate crisis already on our doorstep”.

The report found how G20 support for fossil fuels has not fallen since the Paris Agreement, “alarming at a time when avoiding the worst of climate change means no new finance should flow to oil, gas, or coal.

China, Japan, Canada, and South Korea were the largest providers of public finance to fossil fuels.

G20 support for coal has climbed, says the report. In South Africa, the level of public finance for coal that was reported nearly tripled, from R792m a year in 20132015 to R2.1bn in 2016-2018.

Australia, Brazil, SA and India were the only countries providing more support from public finance institutions for coal than oil and gas from 2016 to 2018. However, some institutions are leading the way in phasing out fossil fuel investment.

“The UK, Canada, France and three MDBS have enacted full or near-full restrictions on direct coal financing, and 14 others have partial restrictions. For oil and gas, the European Investment Bank has a near complete commitment to exclude new support, while France, Germany, Brazil, and six of the eight other multilateral development banks have partial restrictions.”

Glen Tyler-davies, of 350Africa. org, said public finance institutions in SA and in particular the DBSA and IDC have failed to publicly account for how they are responding to the climate crisis.

“As development actors, these institutions should instead shape a just recovery from Covid-19 that ensures a more equitable, greener and resilient future.”

Last month, a report by the Centre for Environmental Rights found the investment policies of DBSA and IDC fall far short of international social, environmental and governance standards.