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A new wave of climate change lawsuits targets state agencies that still provide public funding for fossil fuels despite promises to turn off the funding faucet
Even though today’s climate crisis is already worse than scientists predicted, governments continue to pour billions of dollars of public money into fossil fuels, the single largest source of greenhouse gas emissions. Activists have been protesting against this for years and are now seeing their fight spill over into the courts. In the face of climate change, civil society is sending a clear message. Governments that continue to use taxpayer funds to finance fossil fuels should be prepared for lawsuits.
Lawsuits have the power to influence the expansion of fossil fuels. With more than 2,000 lawsuits filed around the world since 2017, climate change litigation has so far focused on flaws in government and corporate policies, including inadequate emissions reduction targets and climate change lawsuits. is contesting compensation related to. We’re now seeing a new wave of climate change litigation focused on institutions that direct public funds toward fossil fuels, with recent cases appearing in Australia, the United Kingdom, Mozambique, Brazil, South Korea, and more.
These lawsuits allow the public to take back control over their finances and increase transparency in public financial institutions, where investments are notoriously opaque. One important step for governments to take to avoid such lawsuits is to keep their word and pass on oil and gas export financing restrictions at the Organization for Economic Co-operation and Development (OECD) meeting scheduled for mid-March. It is about reaching a global consensus.
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The UK, Canada and the EU have already proposed such restrictions, which could succeed in limiting public funding for fossil fuels if they receive enough support. This will free up billions of dollars to be reinvested in reliable, affordable and safe renewable energy, efficiency measures and promoting a just transition. Getting the United States on side will be key to achieving this, followed by the rest of the OECD. If President Biden is serious about tackling climate change, it is essential that he supports strong measures to block international financing of fossil fuels.
Despite the United States, several G20 countries and major multilateral development banks (MDBs) pledging to end international public financing for fossil fuel projects by the end of 2022, dozens of They continue to invest billions of dollars. Data also shows that far more public money is spent on fossil fuels than on renewables and energy efficiency measures. G20 governments and MDBs provided at least $55 billion for fossil fuels each year from 2019 to 2021, but allocated just $29 billion to renewable energy. Funding these toxic industries is fundamentally incompatible with limiting global temperature rise to 1.5 degrees Celsius, and according to the International Energy Agency, funding for coal, oil, gas and liquefied natural gas (LNG) ) investment in new infrastructure must be halted immediately.
State support for gas exports
A key part of this fight is holding Export Credit Agencies (ECAs) and similar development agencies accountable. ECAs are government-owned or managed institutions that provide financing, often at subsidized interest rates, for large infrastructure projects around the world. The ECA is the world’s largest public financier of fossil fuels, providing seven times more support for fossil fuels ($34 billion) than for clean energy projects ($4.7 billion) from 2019 to 2021. There is.
Without government support, these projects may not be able to proceed. This is especially true with his more than 80% expansion in new LNG exports over the past decade. President Biden’s recent announcement that he is suspending approvals for new LNG export terminals in the United States is welcome, but we need to make faster progress to stay within safe global limits. be. A key part of this fight is holding the ECA accountable and demanding that governments comply with international law.
Civil society groups are appealing to the courts. NGO Jubilee has been accused by Export Finance Australia of failing to properly report environmental and climate impacts associated with its lending activities, which plays a key role in determining how ECAs disclose relevant information. and is suing the Northern Australian Infrastructure Facility.
Last year, Friends of the Earth UK sued the UK ECA over its investment in a major LNG project in Mozambique. Friends of the Earth argued that the $1.15 billion in export financing assistance is illegal, inconsistent with the latest science and not compatible with the Paris Agreement. Although the court ruled in ECA’s favor, the case created enough pressure to halt funding for new fossil fuel projects overseas. Without a public legal battle to bring this issue to the attention of the British public and policy makers, this result might never have been achieved.
In Brazil, the human rights NGO Connectas sued the Brazilian Development Bank for failing to assess the negative climate impacts of its investments. Similarly, South Korea’s ECA was challenged over the funding it provided to Australia’s Barossa gas pipeline project, which runs through a protected marine park, with financiers questioning the need for LNG imports and its environmental impact. I was forced to reconsider.
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At COP26, 34 countries, including a majority of OECD members, signed the Clean Energy Transition Partnership (CETP), pledging to end unabated international public financing of fossil fuels by the end of 2022. Despite this, governments have been unable to maintain their policies. and continue to fund international fossil fuel projects. The Jubilee case comes at a time when Australia announced its commitment to the CETP. We now need to ensure that policy follows the commitments. Simply put, if the government makes a promise and doesn’t keep it, the courts will be waiting for you.
María Alejandra Vesuga Correa is a legal associate in the global finance team. Oil Change International. Leanne Govindsamy is Program Director for Corporate Accountability and Transparency. Environmental Rights Center. Lorenzo Fiorilli is a lawyer working on public finance, energy markets, and competition with capital. client earth.
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