The push to phase out fossil fuels is gaining momentum at the COP26 climate summit as 20 countries have agreed to end financing for fossil fuel projects abroad in a deal announced Thursday.
Several countries had already agreed to end international financing for coal, but this agreement is the first of its kind to include oil and gas projects as well.
The strength of the agreement will depend on how many countries ultimately sign up to it, and whether it can get some of the world’s biggest fossil fuel financier nations on board.
The US, UK, Canada, Italy, Switzerland and New Zealand, among others, were pary to the agreement, which commits to “end new direct public support for the international unabated fossil fuel energy sector by the end of 2022, except in limited and clearly defined circumstances that are consistent with a 1.5°C warming limit and the goals of the Paris Agreement.”
“This is a historic breakthrough that would not have been possible just a few years ago,” Iskander Erzini Vernoit, a climate finance expert at think tank E3G, told CNN. “This leadership group of countries shows how quickly norms on energy are changing.”
Jake Schmidt, a senior strategic director at the Natural Resources Defense Council, said the deal “will help drive the transition to renewable energy,” but also noted that President Joe Biden still has work to do to make sure the US is fully on board.
In April, Biden announced that the administration would seek to end international financing in carbon-intensive energy projects. But the announcement left the door open for exceptions for national security reasons, or “compelling” development that the US would need to support, and it’s still unclear in what cases the administration would approve such funding.
“The US government has been working on this guidance for months now, to kind of further define those” exceptions, Schmidt told CNN. “It’s supposed to be a very rare exception, at least that’s how they’ve been describing it to us. Most of it will not get through, but we haven’t seen the details.”
While environmental groups praised the commitments to end financing for fossil fuel projects abroad, some of the biggest greenhouse gas emitters have so far declined to phase out the use of coal, one of the most important steps to tackle the climate crisis.
COP26 President Alok Sharma said that an agreement on coal phaseout is one of the top goals of the summit.
In October, the UN Environment Programme’s annual “production gap” report found the world will produce roughly 110% more coal, oil, and gas in 2030 than what would be necessary to limit warming to 1.5 degrees Celsius above pre-industrial levels — and 45% more than what would be consistent with 2 degrees.
A recent study published in the journal Nature found that a vast majority of the planet’s remaining oil, natural gas, and coal reserves must remain in the ground by 2050 to avoid the worst consequences of climate change. Most regions around the world, according to the authors, must reach peak fossil fuel production now or within the next decade to limit the critical climate threshold.
And the latest outlook by the International Energy Agency said that more aggressive climate action is needed from world leaders, even as the shift to clean energy leads to a decline in the oil industry.