Europe, US Push for Oil Funding Curbs Deal to Outlast Trump
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The EU, US and other countries are hammering out a plan to throttle tens of billions of dollars of financial support for foreign oil and gas projects, weeks before President-elect Donald Trump moves into the White House.
Negotiators are working toward landing a deal at the Organization for Economic Co-operation and Development gathering in Paris by Nov. 21, according to people familiar with the matter. An agreement would be a culmination of more than a year of effort to expand existing rules that prohibit member nations’ export-credit agencies from financing unabated coal projects.
It’s an about-turn for the U.S., which had effectively stalled work on the broader fossil fuel restrictions for months amid concerns from the country’s Export-Import Bank. But with Trump taking office in two months, it’s a last-ditch bid to lock in a climate policy that environmental advocates say will be difficult for the new administration to reverse while freeing up multibillion-dollar funds for global clean energy projects.
“There aren’t many policy tools that Trump can’t undo, and this is one of the few,” said Laurie van der Burg, Public Finance lead at Oil Change International.
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If new curbs are adopted, the EU and other OECD members would likely block any bid by the U.S. new administration to change the policy.
The group’s members have a long-standing gentlemen’s agreement that effectively allows them to use export-credit agencies to give preference to domestic companies in international deals without running afoul of WTO rules. Member countries have an incentive to abide by the policies since they help ensure a level playing field.
Opposition from South Korea and Turkey remains a key obstacle after bilateral talks Nov. 19 in Paris between the EU and individual countries, the people said, asking not be named discussing private talks. By contrast, the U.S. was described as helping secure an agreement while it seeks some changes that would align a final deal with the charter of its ex-im bank, they said.
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South Korea has opposed the plan citing concerns over energy security and fair competition, while Turkey has argued the proposal isn’t feasible on national security grounds.
Yet there’s public misalignment between the views of South Korea’s Ministry of Trade, Industry and Energy and the representatives of its export-credit agency in the negotiating room in Paris. Ahn Duk-guen, South Korea’s minister of trade, industry and energy, said during a National Assembly meeting Nov. 20 he would meet with relevant financial institutions involved in OECD discussions, acknowledging “global cooperation is essential.”
Ahn’s comments came after Kim Sungwhan, an opposition Democratic Party lawmaker, said it was “embarrassing” for South Korea to oppose the fossil fuel finance curbs, especially amid a domestic push for carbon-free energy.
Turkey’s trade ministry and a spokeswoman for South Korea’s Ministry of Trade, Industry and Energy didn’t comment on the confidential negotiation. White House officials also did not respond to requests for comment.
A final OECD deal could incorporate an emissions threshold or national security exception to mollify concerns, people familiar with the matter said.
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Restricting export-credit agency support for fossil fuels is viewed as crucial to meet global climate goals, a year after nearly 200 countries agreed to transition away from polluting energy sources. It’s also increasingly seen as essential to free up more funding for green energy projects — part of a key aim at ongoing climate negotiations at UN’s COP29 summit in Azerbaijan.
Between 2018 and 2022, export-credit agencies in OECD countries financed an average of $41 billion annually in oil and gas projects, according to data compiled by environmental advocates.
Any agreement curbing fossil fuel financing, even with exceptions, would translate to more support for foreign renewable projects, said Dongjae Oh, with the advocacy group Solutions for Our Climate. And in South Korea, it would also help domestic energy and battery businesses that supply these projects.
