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April 10, 2024

In Charts: Canada, Japan, South Korea ‘blocking clean energy transition’ with fossil fuel finance

Oil rig off the coast of Mexico
The report claims that export credit agencies accounted for 65% of all known fossil fuel activity between 2020 and 2022 (Photo: Shane Adams/Dreamstime.com)

Most G20 fossil fuel financing came from just three countries between 2020 and 2022

Canada, Japan and South Korea are “blocking a globally just and equitable transition to clean energy” with their extensive support for fossil fuels, says a report authored by non-profits Friends of the Earth US and Oil Change International.

Between 2020 and 2022, G20 governments and multilateral development banks provided $142bn in finance for fossil fuels, which exceeds their backing for clean energy during the same period ($104bn), the report says.  

Public finance “has an outsized influence over our energy systems”, and is key in dictating which types of energy projects are built, it notes.

Canada, Japan and South Korea led the way among G20 nations between 2020 and 2022 with their backing for fossil fuels, the report says, citing data from the Public Finance for Energy Database. The data includes finance from countries’ trade and development finance institutions, as well as bilateral export credit agencies, which provide loans, guarantees and insurance to companies backed by public funding 

ECAs accounted for 65 per cent of all known fossil fuel activity between 2020 and 2022, the report adds.

A separate report by non-profits Both Ends, Counter Balance and Oil Change International, published earlier this month, said ECAs were the world’s largest international public financiers of fossil fuels. From 2019 to 2021, G20 ECAs provided $33.5bn annually for fossil fuel projects, compared with just $4.7bn a year for clean energy, they found.

Canada provided extensive backing for oil and gas, while South Korea channelled $8.5bn annually on average towards gas between 2020 and 2022.

Multilateral development banks, ECAs and development finance institutions increased their fossil fuel financing to $43bn in 2022 from $36bn in 2021, with their financing of mixed oil and gas projects almost doubling to $20bn from $11bn during the period. Over the same timeframe, their clean energy support rose to $41bn from $31bn . 

The report notes that just 8 per cent of G20 and MDB international finance for energy went to low-income countries between 2020 and 2022, and nearly three-quarters of this was for fossil fuel projects.

“While international public finance could be a catalyst for the just energy transition, government leaders are failing to use it to deliver clean energy solutions where they are most needed,” says Kate DeAngelis, senior international finance programme manager at Friends of the Earth US.

You can read the full report here.

A service from the Financial Times