Canada has joined the United States, the United Kingdom and 21 other countries in a landmark agreement to end new direct government funding for the development of coal, oil and gas. by the end of 2022 and to redirect investments towards renewable energies.
“It’s a big deal,” said Federal Natural Resources Minister Jonathan Wilkinson of Glasgow, Scotland, the site of a United Nations sponsored meeting on climate change.
“This is a signal that many countries in this world are pledging not to use public resources to finance the further exploration and development of fossil fuels.”
Climate activists hailed the deal.
“This shows that Canada recognizes the adverse social and economic impacts of fossil fuels and the urgent need to end global production and use,” said Alan Andrews of Ecojustice, a law firm in the environment.
But industrial groups reacted with caution.
“We believe responsible energy producers like Canada should play a greater role in meeting global energy demand,” said Jay Averill of the Canadian Association of Petroleum Producers.
Few details were immediately available on the deal. It urges signatories to stop using loans, loan guarantees, grants, share purchases and insurance coverage from any government or government agency to fund new international fossil fuel developments.
Oil Change International, a group that monitors fossil fuel financing, says about $ 78 billion a year is paid on average to such projects. He estimates Thursday’s deal could affect around $ 22 billion.
But in Canada, the issue is complicated by the fact that Export Development Canada, through which most of this funding flows, is involved in international and domestic agreements.
Wilkinson said the new deal will affect about $ 1 billion in agency funding, roughly what was committed for such projects last year. This money could now be used for renewable energy projects.
“It certainly unlocks that potential,” Wilkinson said. “The mandate (of Export Development Canada) is increasingly focused on a net zero portfolio.
The agreement also allows governments to continue funding projects in which carbon emissions are “reduced” or which meet reduction targets. Canada is always free to fund developments such as carbon capture, Wilkinson said.
“This does not affect funding to support investments in clean technologies that aim to reduce emissions.”
The government has yet to determine how the deal will apply specifically to Canada, Wilkinson said. There are also clauses that allow fossil finance “under limited circumstances” – details that need to be worked out.
“They drafted it in fairly general terms with a number of provisions that need more detail,” he said. “We will define exactly what Canada means by this. “
Bronwen Tucker of Oil Change International said it could be a loophole.
“There is a way to do it in good faith and a way to do it in bad faith.”
It all depends on how investing in fossil fuels is defined, Tucker said.
“I have some concerns there.”
She said Canada has for years been one of the world’s largest public financiers of fossil fuels, averaging about $ 13.6 billion a year.
Wilkinson acknowledged that the deal did not include China, Japan or Korea – the other major backers of fossil fuels in the world. He said he hopes these countries will eventually sign just as they recently signed agreements to stop funding international coal development.
“We will work to broaden the coalition and work to put pressure on all actors, including China, to go in this direction as well.”
In Alberta, Provincial Energy Minister Sonya Savage said the agreements the Liberal government is making in Glasgow make Canada an “exception” in a world that is accelerating fossil fuel production, not the ‘stopped.
“It sends the wrong message to investors,” she said, calling COP26 a “photo shoot”.
The COP26 agreement is in addition to the government’s previous commitments.
During the recent election campaign, the Liberals said they would eliminate fossil fuel subsidies by 2023. Export Development Canada said by 2023 it would cut support to the six most intensive sectors by carbon by 40% from 2018 levels and would establish “sustainable financing targets” by July 2022.
This report by The Canadian Press was first published on November 4, 2021.
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