Note: to read about the significance of this policy announcement and Jubilee Australia’s 14-year history of advocating on export credit in Australia click here.
Last week at COP28, the Australian government took the long overdue step of signing onto the Clean Energy Transition Partnership (CETP) - also known as the Glasgow Statement. In simple terms, the CETP is a commitment by 40 countries and institutions to stop financing fossil fuel projects overseas.
For over a decade, Jubilee Australia has been shining a spotlight on Australia giving taxpayer money to fossil fuels overseas. We’ve tracked over $1.5 billion it has given to fossil fuels as export finance, exposed the human impacts of your money funding an ExxonMobil project in Papua New Guinea, calculated the sums to find how much aid money is funnelled to fossil fuels, and this year we sued Australian government agencies to reveal the climate and biodiversity impacts of the projects they fund.
We’ve been extremely vocal in urging Australia to stop giving export financing to fossil fuels and sign onto the CETP since it was first announced two years ago.
While the government’s announcement to sign on to the CETP is welcome, the devil is always in the detail.
This announcement reflects growing public attention on the role taxpayer money plays in propping up fossil fuels, especially as more private financiers step away from these polluting projects. The public now waits for the government to share what delivering on this promise will look like in practice.
In line with the CETP, Australia has twelve months to publish a policy on how it will implement this commitment. While many signatories respect that the spirit of the agreement is to shut down financing overseas fossil fuels, there have been cases of countries exploiting loopholes or even worse.
Building or breaking trust?
When announcing the commitment, Foreign Minister Penny Wong pointed to the devastation climate change has caused in the Pacific. She said by signing the CETP, Australia was aligning with “Pacific priorities''. Throughout COP28, Pacific leaders made it abundantly clear that they expect Australia to stop supporting new fossil fuels at home and abroad. Australia’s announcement came days after organisations across the Pacific urged Australia to finally sign the CETP.
If the Albanese government exploits any loopholes, looks for workarounds or carves out any exceptions, it will be viewed as another broken promise. Australia must stop giving taxpayer money to all overseas fossil fuels - and do it quickly.
Let’s not forget that joining the CETP is simply the first step of Australia accepting that foreign aid and export finance shouldn’t be squandered on fossil fuels. This isn’t a high bar and pales in comparison to the ambitions of other nations. If we zoom out to look at the broader landscape of public financing, it’s crucial to remember that the $1.5 billion or so in fossil fuel financing EFA gave over eleven years doesn’t come close to the bigger issue of the $11.1 billion Australian governments gave to fossil fuels as subsidies in the last financial year alone.
Meaningful action or greenwashing and broken promises
The test of whether Australia will live up to their promise in their CETP implementation is extremely simple and can be summed up by two questions for the government:
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Will their plan cover all sources of public finance for overseas fossil fuels?
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Will their plan cover all fossil fuels?
On the first pillar, at minimum the government must shut down Australia’s major export finance pipelines. This includes Export Finance Australia (EFA), the Northern Australia Infrastructure Fund (NAIF) and any new funds with similar mandates. Doing so would prevent reckless financial decisions such as giving hundreds of millions of taxpayer dollars to ExxonMobil. instead of the Australian innovators who are trying to find new international markets for their products.
Equally important is ensuring Australia’s plan covers development assistance
Citizens across Asia have decried governments funnelling foreign aid budgets to fossil fuels via multilateral development banks (MDBs), often through cheap loans. This is how a series of nonsensical projects got off the ground: from a fossil gas project in Bangladesh where renewable energy is already cheaper, to paying an Indonesian coal company to ‘phase out’ its coal-fired energy plant in 10 years’ time which helped free up money for another coal fired-plant next door.
Our Hidden Cash report estimates that between 2016-2021 Australia gave $828 million of development assistance to fossil fuels this way. The government is the 5th and 6th largest shareholder in the Asian Development Bank (ADB) and Asian Infrastructure and Investment Bank (AIIB) respectively. Australia sits in the top 20 shareholders of the World Bank. The Australian government appoints directors to the boards of these banks, sometimes with a mandate to also represent certain Pacific countries.
Nobody is expecting Australia to change the world’s development finance system - but the government should publish its voting guidance.
When Australia votes on decisions at MDBs about what projects should be financed, its policy should be to vote in favor of those that help lift people out of poverty and against fossil fuels, which are a leading driver of gender inequality, forced migration, poverty, natural disasters and even death. This is the minimum action Australia needs to take to ensure basic transparency, accountability and integrity in our development assistance program.
The second pillar of implementing the CETP is straightforward: we must include all overseas fossil fuels.
If the Albanese government makes any attempt to claim we need more fossil fuels in order to reduce fossil fuels, or reference imaginary, unproven science instead of the actual climate science we have today, it will be taken as weasel words. Likewise, if they try to use loopholes and caveats to conflate genuine humanitarian interests - such as backup generators for hospitals in disaster zones - with excuses to explain away financing large-scale fossil fuel extraction. Any vague, unspecified references to ‘energy security’ which ignore that ‘climate security’ is a more pressing national or geopolitical security crisis in many states, or that renewable energy is already cheaper than fossil fuels in most countries in our region, will be received similarly or met with widespread civil society concern. In the worst cases, such language has been used as a foil to defend climate laggards such as one of the world’s largest financiers of fossil fuels.
Australia redirecting its export credit or foreign aid money doesn’t prevent other countries from pursuing fossil fuels - but it does mean they won’t be using our taxpayer dollars to do it.
Economies for the Climate Age
In the lead-up to COP28, Australia was called out as a ‘petrostate’, or even a ‘rogue nation’ by one Pacific leader. Each year, Australia doles out $11 billion in state and federal subsidies to fossil fuels, a huge wave of cash flooding markets to try to push against the incoming tide of cheaper and more efficient renewable energy and changes to systems to reduce energy needs and costs. Managing our export and energy systems this way makes no logical sense.
It is hard to overstate how little the world trusts Australia’s climate claims, considering our government’s continued support for fossil fuel expansion. Just this year, we’ve seen ministers standing alongside coal companies in court cases, spruiking fossil gas exports mere weeks ahead of climate talks, and ignoring Tiwi, Larrakia, Gomeroi and other First Nations peoples’ voices asserting their rights and responsibilities to make decisions for country.
A government developing a pipeline of over 100 fossil fuel projects is a betrayal of Australian communities living with the long-term economic, environmental, and health-related impacts of extreme bushfires and floods.
Meaningfully implementing the CETP is one step along the journey Australia needs to take to remedy its poor climate reputation. This is not only important to diplomacy and the environment, but also for the economy. The climate crisis is already putting our national and global economies at risk. Since the turn of the century, we have been entering the new economies of the climate age. Our economies need to take into account the physical risks of the climate crisis; the economic benefits of smarter, more efficient energy systems; and the volatility of fossil fuels in a world where they’re no longer needed. For decades other countries have been adapting their economies to the new climate age, while Australia is falling further and further behind. Australia has no endgame if it ties our future or prosperity to a dying industry that is literally killing people and the planet.