Public funds for fossil fuels dwarf that for green energy: Study

More than twice as much money went towards bankrolling oil, gas and coal projects than to renewable energy between 2018 and last year, according to an analysis of public finance released on Thursday by two environmental groups.

Most of that money went to projects in wealthier countries rather than to developing the energy needs of poorer nations, it found.

The Group of 20 (G-20) nations spent at least US$63 billion (S$85 billion) per year financing oil, gas and coal projects through their development finance institutions, export credit agencies and the multilateral development banks, compared with about US$26 billion per year for renewables, said the report by non-governmental organisations Friends of the Earth US and Oil Change International.

It was published just ahead of this weekend's G-20 leaders' summit in Rome and the start of the COP26 United Nations climate talks in Glasgow today.

The G-20, which includes the United States, Russia, China, India and Indonesia, is responsible for about 80 per cent of humanity's annual carbon dioxide emissions that are heating up the planet.

The International Energy Agency had said that development of new oil and gas fields must stop this year and no new coal-fired power stations built if the world is to stay within a relatively safe 1.5 deg C of warming since pre-industrial times and meet the goal of net zero emissions by 2050.

"Public finance has an outsized impact because it 'de-risks' projects for other investors," said Ms Bronwen Tucker, public finance campaign manager at Oil Change International. The US$188 billion of funding for 2018 to last year made a much larger amount of private investment in new oil, gas and coal possible, she said.

The report found that national export credit agencies, which help firms get contracts for energy-related projects abroad, provided 11 times as much support for fossil fuels than clean energy with US$40 billion per year for fossil fuels versus US$3.5 billion for clean energy.

Canada, Japan, South Korea and China provided the most public finance for fossil fuels, together accounting for nearly half of the money from G-20 nations and development banks.

Public finance, though, is dwarfed by the total value of subsidies for fossil fuels.

A report by BloombergNEF and Bloomberg Philanthropies earlier this year found that G-20 nations provided more than US$3.3 trillion in subsidies for fossil fuels between 2015 and 2019, or just over US$600 billion a year. This is despite the landmark 2015 Paris climate agreement in which nations pledged to limit global warming - and ultimately fossil fuel use.

Governments support fossil fuels in many ways. Besides tax breaks, there are production subsidies in national budgets and subsidies to lower electricity costs for consumers.

The Bloomberg report said that while G-20 governments say they recognise the urgency of the climate crisis, continued large-scale support for fossil fuel firms, their projects and products all suggest a very different picture.