COP26: 20 countries including US, UK pledge to stop financing foreign fossil fuel projects

Taking a huge step forward in the shift to cleaner fuels, more than 20 governments will suspend all financial support for fossil fuel development abroad and redirect funds to green energy from next year. According to The Guardian, the countries engaged include the United States, the United Kingdom, Denmark, and certain underdeveloped countries that would benefit from such funding, such as Costa Rica. One of the financial entities engaged is the European Investment Bank. Diverting financing from fossil fuels to Low Carbon Emissions will create an estimated $8 billion per year for clean energy worldwide. 

Collin Rees, programme manager for the Oil Change International campaign organisation, said the plan, which will be announced on Thursday, November 4, during the COP26 meeting, will mark a significant shift in the outlook for fossil fuel investment worldwide, The Guardian reported. He was quoted by the media agency, saying, "This is a massive step forward. This represents a serious chunk of the current international public finance for fossil fuels. It’s a really big thing, though there may be some devil in the detail." Rees cited a May report from the International Energy Agency, which stated that all new fossil fuel resource development must cease by the end of this year if global warming is to be kept to 1.5 degrees Celsius over pre-industrial levels.

China and Japan shunned the initiative

The pact forbids the funding of any fossil-fuel development, including gas exploration, however, there are exemptions. However, China and Japan, two of the world's largest backers of fossil fuel development, have snubbed the idea. The countries involved will also be free to develop their own fossil fuel resources, such as oil and gas reserves, in their own territories. There are at least 24 pending fossil fuel projects in the United States, with a total potential greenhouse gas emissions of more than 1.6 gigatons.

Despite hosting the COP26 climate meeting in Glasgow, the UK is licencing new oil and gas developments in the North Sea.  Because the project is already in the works and the programme only covers new investments, the UK will be free to proceed with funding a contentious gasfield in Mozambique. The accord will have no impact on private-sector funding for fossil fuels. As president of the G7 and host of COP26 this year, the UK has made strenuous steps to prohibit coal financing from outside.

(With inputs from agencies)

Image: AP