Australia is the largest exporter of coal and gas, partly thanks to billions of dollars in foreign government support, new research shows.
Over the past decade, public financial institutions overseas have pumped $AUD36.7 billion into Australian fossil fuel projects, according to a paper published by Jubilee Australia Research Centre, the Australian Conservation Foundation, South Korea’s Solutions for Our Climate and the Japan Centre for a Sustainable Environment and Society.
This is 11 times more than the $AUD3.3 billion given to renewable projects over the same period.
The report also shows the Australian Government has blocked international efforts to limit fossil fuel financing, while over the last decade it has facilitated foreign bankrolling of the Australian fossil fuel industry to the tune of $AUD36.7 billion.
Against the backdrop of the global COP26 meeting, the report shows foreign governments are using secretive export credit agencies and other types of public financial institutions to finance fossil fuel developments that may have otherwise struggled to find private financing.
The paper also finds the Morrison Government is deliberately preventing efforts to turn off the tap for this type of overseas financing by playing a blocking role at international negotiations at the OECD, UNFCCC and other forums.
Many countries, including the UK and France, are moving to end government funding for overseas fossil fuel developments, but Australia is leading the charge to prevent reaching agreement to broaden such initiatives.
It’s easy to see why. More than $28 billion in foreign financing went to Australian liquefied natural gas projects that make up three quarters (66.9 million tonnes) of the LNG capacity of Australia’s gas developments as of May 2020, including to Ichthys LNG (10.5 billion), APLNG (7.6 billion) and Wheatstone LNG (4 billion).
Just three countries gave Australia the bulk of this LNG financing, with Japan providing 41% ($11.7 billion), China giving 20% ($5.6 billion) and South Korea providing 14% ($3.96 billion). This public financing is often make-or-break for projects, with subsidies or the de-risking of private financing propping up projects that may not otherwise get off the ground.
On Thursday, the UK, the European Investment Bank and several other nations and public financial institutions are expected to launch an initiative designed to end support for overseas fossil fuel expansion. Whether Japan, Korea or Australia take part will show whether these nations are serious about keeping warming to less than 1.5°C.
A wave of LNG projects is in the pipeline, including the Barossa project off the coast of the Northern Territory, which will be one of the world’s dirtiest gas projects. It has received funding from South Korean export credit agency KEXIM. Other public financial institutions are considering following suit.
Jubilee Australia Campaigns Director, Dina Rui, said this funding must stop if we want to avoid the worst impacts of the climate crisis.
“Even the traditionally conservative International Energy Agency says that staying below 1.5 degrees of warming means there can be no new coal, oil or gas projects,” she said.
“Australia should support the shift away from fossil fuels, not try to hold back progress by blocking stronger agreements to end public funding of coal and gas. Delaying the shift away from fossil fuels only benefits mining executives and party donors. Meanwhile, local communities in Australia are left to deal with the real impacts of climate change,” Ms Rui said.
The Australian Conservation Foundation’s Climate & Exports Campaigner, Elizabeth Sullivan, said “Instead of growing a world-class renewable energy and exports sector, our government appears to be courting billions in overseas funding in an attempt to expand the fossil fuel industry.
“The public mandate that once allowed Australia to open up vast new coal, oil and gas basins is gone. It’s time for the government to listen to Australians and choose a renewable future.”
The public mandate that once allowed Australia to open up vast new coal, oil and gas basins is gone.
Solutions for Our Climate Researcher, Dongjae Oh, said the South Korean government’s LNG expansion plans could result in more harmful fossil fuel investments in Australia, where Korea already stands as the third-largest fossil fuel backer.
“Additional investments in Australian fossil fuel projects will not only jeopardize the financial stability of Korean public financial institutions, but also cause irreversible damage to the local environment, communities, and our climate,” he said.
Mr Oh pointed to Korean export credit agency KEPCO's recently failed Bylong coal mine project as an example of how quickly fossil fuel assets can be left stranded. "Korean ECAs should end consideration of further investments in Australian oil and gas projects, starting with the Barossa gas project,” he said.
Yuki Tanabe, Program Director at the Japan Center for a Sustainable Environment and Society, said “Japan’s support for the Barossa project went against the G7 Summit Leaders’ Statement, which commits G7 countries to aligning international public funding with the 2050 net zero target.”