Halting funds for new fossil fuel projects

ByHoor Asrar Rauf

A national swimming champion and recently Graduated from UCF-USA in Hospitality and Event Management


June 4, 2022

Halting funds

Hoor Asrar looks at an important decision

In a major development of Halting funds the top industrially developed countries have declared opting out of utilizing fossil fuels in the future that may go a long way in addressing the climate issues. In this context, the Group-7 countries have decided to end government financing for international coal-fired power generation and to accelerate the phasing out of unabated coal plants by the year 2035. This resolve implies that the most industrialised countries plan de-carbonising electricity sectors by 2035 in large measure. Unabated coal plants include those that have not yet adopted technology for capturing and using carbon dioxide. The commitments on the phase-out of coal plants will particularly affect Japan, which relies heavily on coal-fired power plants.

This commitment also entails that new road vehicles in their countries would be predominantly zero emission vehicles by 2030 and that there would be accelerated cuts in the use of Russian natural gas that would be replaced by clean power in long term. It is generally agreed that the pollution created by vehicles plying on the roads contribute considerably to the deteriorating position of the climate change. It is therefore expected that the private sector in the major industrial countries will be required to provide financing moving from billions to trillions. G-7 countries acknowledged the need laid out by the International Energy Agency for their economies to invest at least $1.3 trillion in renewable energy, tripling investments in clean power and electricity networks between 2021 and 2030. It is pointed out that the G-7 committing to end public finance for fossil fuels and shift it to clean is a massive win once concrete actions start taking place.

These commitments mark the latest in a global push for countries, in particular the largest and wealthiest ones, to halt public funding for fossil fuel projects around the world and to help developing countries grow their economies without relying on dirty fuels such as coal. The effort has gathered speed in recent years, even as the transition to cleaner forms of energy is not happening nearly as fast as climate activists believe is necessary for the world to meet the goals of the Paris climate agreement. At a major U.N. climate conference in Glasgow dozens of countries pledged to phase out their use of coal. While countries such as Poland and Vietnam joined in that pact, some of the world’s biggest users of the planet-heating fuel, including China and the United States, did not sign onto the agreement. The United States and nearly two dozen other countries did, however, embrace a separate agreement vowing to stop spending tax dollars to support international fossil fuel projects, a move the group said would divert $18 billion a year toward clean energy.

That promise to restrict public money for foreign fossil fuel projects does not affect what countries do at home. China, Japan and South Korea, which together make up nearly half of international public funding for fossil fuel projects, did not join that agreement at COP26. While the final pact that nearly 200 countries agreed to in Glasgow included the first explicit mention of coal and fossil fuel subsidies, the language of that provision was watered down over the course of the summit. It ultimately called upon countries to phase-down rather than phase-out only unabated coal and inefficient fossil fuel subsidies. Halting the flow of money to new fossil fuel development is essential to meeting the world’s climate goals. In this context, the International Energy Agency published a road map to zeroing out carbon emissions by 2050; according to that plan, there should be no new development of fossil fuel supplies after that year.

But the world still depends heavily on fossil fuels, especially the globe’s biggest emitters as is borne out by the fact that when US greenhouse gas emissions roared back in 2021 after a brief drop during the early phase of the coronavirus pandemic, a significant factor was a 17 per cent surge in coal-fired electricity. Moreover, Chinese officials reported that their coal production surged to its highest level in years. In this backdrop it is made clear that it is critical that G-7 leaders find ways to accelerate the shift to cleaner energy this decade. Even as many developed economies are beginning to move to cleaner forms of energy and reduce their overall emissions over time, it is in the developing world that scientists and environmental advocates say serious funding is needed to help nations develop in greener ways and avoid locking in fossil fuel infrastructure. The world’s richest nations have pledged repeatedly to provide at least $100 billion annually in climate financing to help poorer countries deal with the impacts of climate change and boost clean energy — even though that is only a fraction of the funding needed for such goals but the developed world has yet to fulfill that promise. TW

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