COP26: U.S., UK commit to stop financing foreign oil projects- China abstains

WASHINGTON (Bloomberg) --The UK, the U.S. and 18 other nations are signing a joint statement committing to end funding for foreign oil, gas and coal projects by the end of next year, while prioritizing support for clean energy, according to people familiar with the matter.

The one-page statement, to be announced Thursday at the COP26 climate summit in Glasgow, Scotland, would mark a further tightening of the flow of money from public development banks to fossil-fuel projects, with the potential to shift some $8 billion in finance to cleaner energy, said one of the people, who asked not to be named amid ongoing negotiations.

However, some of the biggest funders of foreign fossil-fuel projects, including Japan, Korea and China, are not slated to sign the pledge -- omissions that could undercut its impact. And under the document, funding could still flow to oil, gas and coal ventures in limited and clearly defined circumstances, as long as they are consistent with keeping warming to 1.5-degrees Celsius.

Countries signing the statement “aligning international public finance with a clean energy transition” are set to include Canada, the U.S. and Denmark, while Sweden is not expected to join, said the people. Deliberations were still ongoing as of late Wednesday, one of the people said. Several financial institutions are on board, one person said.

Although several governments, including the UK, U.S. and European Union have previously advanced plans to forswear fossil fuel finance, the new statement would force many to go further to block funding from regional development banks such as the U.S. Export-Import Bank and U.S. International Development Finance Corp., one person said.

International public finance is now lopsided in favor of fossil projects. In 2020, the Group of 20 nations alone contributed nearly $600 billion to oil, gas and coal projects, according to BloombergNEF estimates -- a sum six times the amount of climate finance due to be delivered by developing countries last year.

The UK business department had no immediate comment.