FE Today Logo

Legal opinion puts govts 'on notice' over export finance for fossil fuels

May 05, 2021 00:00:00

BARCELONA, May 4 (Thomson Reuters Foundation): Governments could face litigation if they do not step up efforts to stop their export credit agencies financing fossil fuel infrastructure and activities overseas, legal experts and climate activists warned on Tuesday.

Advocacy group Oil Change International released a legal opinion saying the agencies - which provide loans, insurance and guarantees for businesses to invest abroad - should stop lending to oil, coal and gas projects around the world immediately.

"If they continue doing this, they are breaching international law," said Jorge E. Viñuales, a professor of law and environmental policy at the University of Cambridge who authored the opinion with Matrix Chambers barrister Kate Cook.

They concluded that in the context of accelerating climate change and shrinking space for countries to emit more greenhouse gases, there is an "in principle" requirement on states under international law to stop funding fossil fuel projects.

Governments should also reduce existing support for fossil fuel-related projects and activities within a clear time-frame, and avoid locking in polluting infrastructure that could use up a large part of the world's remaining carbon budget, they added.

A growing group of European nations and South Korea have pledged they will no longer use government money to fund coal mining and coal power plants in developing countries.

But climate campaigners also want donor governments to set deadlines to end similar backing for oil and gas.

The United States said last month its departments and agencies would seek to end international backing for carbon-intensive energy projects and promote the flow of capital toward "climate-aligned" investments.

The legal opinion issued on Tuesday examines how obligations under customary international law, international climate change law, international human rights law and guidelines by the Organisation for Economic Co-operation and Development (OECD) apply to export credit agencies.

Such agencies based in G20 countries provided about $40 billion annually for fossil fuel activities from 2016-2018, support that has not dropped since the adoption of the 2015 Paris Agreement, according to Oil Change International. Viñuales said scientific evidence on the urgency of curbing global warming, as well as its surging impacts on people's lives, gave export credit agencies a legal responsibility to act.

"It's like walking around a park and seeing a drowning man - your obligations of care are different than if the man was not drowning," he told the Thomson Reuters Foundation by phone.

Share if you like