In December 2023, the Australian government signed up to the Clean Energy Transition Partnership (CETP), an international agreement to redirect international public financing from fossil fuels to clean energy.

As we stated at the time, the devil is in the detail, and we have been dogged in our advocacy to government departments and agencies on what detail is required. 

In April of this year, we prepared a policy proposal for the federal government, detailing what a thorough and effective implementation of CETP must look like. 

Now that the government has published its CETP Implementation Guidelines, how do they stack up?

At the top of the agenda: getting Australia’s export credit agency, Export Finance Australia (EFA), out of fossil fuels for good. 

A Future Made in Australia

Earlier this year the Albanese government published its policy plans for a Future Made in Australia: a $22.7 billion package to invest in renewable energy, skills training and industrial innovation.

The Future Made in Australia (FMIA) legislation established two key streams of financial support for economic resilience and a pathway to net zero emissions. EFA was designated as an important financier for FMIA, in distribute the requisite funding. However, one critical piece was missing – a clear prohibition of fossil fuels.  

With our partners at the Australian Conservation Foundation, we lobbied various government departments, agencies and ministers, crossbench and minor party MPs, and international stakeholders. We advocated on Australia’s need to deliver on its CETP promises and end EFA’s pipeline to the fossil fuel sector.

On 28^th November 2024, during a mammoth sitting week in the federal parliament, the Albanese government reached an agreement with Greens and crossbench MPs to include these fossil fuel exclusion clauses in Future Made in Australia – and to write CETP into law. 

“We commend the government's robust implementation of CETP, both through legislated provisions under Future Made in Australia and the government's CETP Implementation Guidelines published last week. This is a pivotal moment for Australia, where our international public financing bodies are being directed away from climate-wrecking fossil fuels and towards the clean energy export industries of Australia's decarbonised future.”

Annika Reynolds,

National Climate Policy Advisor,

The Australian Conservation Foundation.

      If you’re interested in a bit of light reading, you can read the actual legislation for Future Made in Australia and its accompanying Omnibus.

If you’d rather not (and we wouldn’t blame you), then luckily you can scroll down for our analysis.

EFA’s Accounts

EFA has two streams through which it finances Australian export businesses.

The Commercial Account – the source of the vast majority of its fossil fuel transactions – is effectively closed off to fossil fuels for good. 

However, the compromise reached by the government and crossbench leaves a foot in the door for funding fossil fuels via EFA’s National Interest Account. This is the mechanism by which the government of the day can bypass EFA’s usual processes to instruct the agency to finance a specific project deemed “in the national interest”.

Okay policy nerds, but what does this actually mean?

Though not impossible, it’s now incredibly difficult for EFA to finance fossil fuels.

In simple terms, a fossil fuel project seeking EFA’s support must now;

• Demonstrate it’s not increasing Australia’s emissions, in line with the government’s 2022 Climate Change Act
• Demonstrate it’s not contravening Australia’s commitments to the Clean Energy Transition Partnership
• Require dual ministerial approval by the Ministers for Finance and Trade
• Be prohibited from accessing the Future Made in Australia funds

We are satisfied that these measures send a clear signal to prospective fossil fuel interests that EFA is no longer a source of investment. However, we will remain vigilant, as we anticipate challenges to this newly established principle.

What’s next?

We welcome the government’s commitment to “update these guidelines as necessary, to ensure coherence with Australia’s evolving climate obligations, commitments and policies”. The government’s consultation with civil society over the course of this policy process has improved their CETP implementation, but the consensus is that there is still scope for improvement.

So, what do they need  to do?

End government support for domestic fossil fuels

Australia’s CETP Implementation Guidelines reveal a glaring hypocrisy: they define “international” as only fossil fuel projects located overseas. While this is stock standard for most CETP signatories, other signatories are not the world’s second largest exporter of fossil fuels.

When 80% of the fossil fuels dug up from this continent and its surrounding seas are sent overseas, domestic fossil fuel projects are by their very nature “international”. 

It’s also worth noting that although the government’s FMIA legislation has effectively ruled out EFA funding fossils, it continues to lure in financing from foreign export credit agencies (ECAs), particularly Japan and Korea, to underwrite domestic gas projects such as Santos’ Barossa and Woodside’s Scarborough. This ECA support is critical to the commercial viability of these projects, many of which would otherwise struggle to get off the ground (you can read more about foreign ECA financing of Australian fossil fuels here). 

So it raises the question: if the government has deemed it inappropriate for the Australian taxpayer to pay for international fossil fuels, why is it okay for Japanese and Korean taxpayers to foot the bill?

Middle Arm: a case study

In 2018, the Federal and Northern Territory governments signed a memorandum of understanding to “deliver infrastructure and programs in support of the Northern Territory Gas Industry and gas leveraged industries”. A few years later, the Morrison government announced $1.5 billion for Middle Arm, an industrial petrochemicals hub that will enable the exporting of gas fracked in the Beetaloo Basin and drilled in the Timor Sea.

An Infrastructure Australia report to the Northern Territory government earlier this year advised the business case had not been accepted for evaluation. Despite this, and consistent claims of greenwashing, the Albanese government has not only matched Morrison’s commitment – but actually upgraded it. 

“Public money should not be spent on expanding fossil fuels at Middle Arm. The Middle Arm gas and petrochemical hub is a plan to expand fossil fuel production in the Northern Territory, along the way impacting the health and environment of Darwin, Larrakia country.

Taxpayers should not be subsiding the infrastructure that fossil fuel companies will use to make a quick buck at the expense of people’s livelihoods. It is time for the Albanese Government to commit to diverting the funds allocated for Middle Arm away from fossil fuels and towards things that will actually improve people’s lives here in the NT.”

Naish Gawen,

Policy & Research Lead,

Environment Centre NT.

If the Albanese government follows through on funding Middle Arm, it will actually exceed the total amount EFA spent on fossil fuels over a fifteen-year period (between $1.6 to $1.7 billion from 2009 to 2024).

What the Australian government must do:

• Sharpen its CETP definition of “international” to include domestic projects or supportive infrastructure with a primary purpose to export fossil fuels.
• Apply the CETP to the Northern Australia Infrastructure Facility (NAIF), a financing agency with a history of funding fossil fuel export projects in Australia’s north.
• Walk back their intended financial support for Middle Arm.

Papua LNG and the need for better transparency

The government faces another challenge: concerns that the Papua LNG gas project proposed in Papua New Guinea is seeking ECA financing in the region.

To date, EFA has refused to rule out financing the proposed Papua LNG project. The project poses serious human rights and environmental risks, in addition to accelerating the climate crisis. A Fair Finance Japan report has also spotlighted that it fails to meet the Equator Principles, the IFC Performance Standards and the UN Guiding Principles on Business and Human Rights – all standards that EFA claims to adhere to. 

More than ten years on from PNG LNG’s first gas – a separate project also financed by EFA – some landowners have still not been paid. This clearly signals violations of Free, Prior and Informed Consent (FPIC), which EFA has never investigated. It also indicates grossly exaggerated economic claims. Similarly, Papua LNG has yet to publish any information about its plans for decommissioning or related costs. 

The project also undermines renewable energy in PNG. The PNG government has identified a series of planned and proposed renewable energy projects that, if funded, could dramatically expand energy access and still meet up to 78% of PNG’s on-grid energy by 2030. This would come at 400 million kina (US $110 million), only a fraction of Papua LNG’s $13 billion cost that could potentially balloon out to $18 billion. 

A core recommendation of Jubilee Australia’s CETP policy proposal was for EFA to publicly disclose, when asked, if it will not finance certain projects. This can signal to other financiers where EFA does not believe a project will meets its policies or priorities. More practically, this reduces the burden on climate justice advocates allowing them to focus on potential financiers who may be considering the project. 

“If the government and Export Finance Australia are clear in their commitments, then there should be no problem in publicly ruling out projects such as Papua LNG that don’t meet their policies or priorities. Fence-sitting creates undue anxiety that EFA will consider financing problematic projects – and it adds to the already huge burden of PNG climate justice advocates.

As climate justice advocates in PNG point out, fossil fuels are a dying industry with the world increasingly enacting net zero policies. Renewable energy is a cheaper, cleaner and more accessible form of energy and this is vital for PNG’s future economy.” 

Shona Hawkes,

Director of Land and Environmental Justice,

Jubilee Australia Research Centre.

What the Australian government must do:

• Work with EFA to make a public commitment that it will not finance Papua LNG, in keeping with its CETP requirements and obligations under international law.
• Formally incorporate further transparency and accountability measures into its CETP implementation, such as a project-based and company-based exclusion list.

Multilateral development banks, and the hidden cash that goes to fossil fuels

When we share with people that a portion of Australia’s foreign aid budget goes to fossil fuels, many are understandably confused. Surely that can’t be right. Right?

Our research has identified the step-by-step process Australia takes to funnel taxpayer dollars into the expansion of fossil fuels in our region:

1. The Australian taxpayer funds Australia’s Official Development Assistance (ODA), more commonly referred to as foreign aid.
2. A portion of ODA goes to multilateral development banks (MDBs) such as the World Bank, Asian Development Bank (ADB) and Asian Infrastructure Investment Bank (AIIB) – in 2020 this totalled 19% of Australia’s ODA.
3. The Australian government appoints directors at the MDBs to influence the banks’ investment decisions. Australia is the fifth largest shareholder at the ADB and sixth largest at the AIIB, giving the government considerable leverage.
4. The MDBs provide financing to fossil fuel development projects. Between 2016 and 2021, the three previously mentioned MDBs collectively provided over AU$32 billion to these projects.

We’ve done the maths, and Australia’s “share” of financing to fossil fuels through the MDBs from 2016 to 2021 was roughly AU$828 million.

Whilst the government’s CETP Implementation Guidelines state they apply to the ODA, they don’t mention MDBs. For a more robust implementation of CETP, Australia must and directly and firmly address the issue of MDBs. We note that fellow CETP signatory Norway – who published their own implementation guidelines at the same time as Australia – have taken this additional step.

"ActionAid welcomes the Australian government's new policy implementing the Clean Energy Transition Partnership to end international public finance of fossil fuels. As the government updates its guidelines, ActionAid calls for the policy to inform Australia's position on fossil fuel investment on the boards of the multilateral development banks that it funds.

The climate crisis, driven by fossil fuels, is having a devastating impact on women around the world, and as a key shareholder in multilateral development banks, Australia can help ensure taxpayer dollars don't fund fossil fuel projects overseas, but instead support the urgently needed transition to renewable energy."

Kat Tu,

Head of Campaigns & Policy,

ActionAid Australia.

What the Albanese government needs to do:

• Issue new voting guidance to its appointed directors at the MDBs, aligning with the CETP and specifically instructing them to vote against fossil fuel projects and in favour of renewable energy.

2025 and beyond

In summary, Jubilee is broadly satisfied that Australia’s CETP Implementation Guidelines honour their commitment to the spirit of CETP – with amendments to the FMIA legislation being the true crowning achievement of this process.

There are still creases to iron out, and Jubilee Australia will continue to lobby for these improvements. Signals from the government that they welcome this ongoing advocacy on CETP have been well-received by our team and our partners, and we look forward to continuing to push for the most ambitious, effective and appropriate policy and action to address the climate crisis.

Author: James Sherley, Climate Justice Campaigner.

Email: james@jubileeaustralia.org