G7 spending billions on fossil fuels isn’t the way to ‘build back better’
This post is by Dr Ruth Valerio, Tearfund’s global advocacy and influencing director.
As the host of both the G7 Leaders’ Summit this weekend and the COP26 climate summit in Glasgow later this year, the UK has the opportunity and the mandate to show climate leadership. G7 countries’ pledges to ‘build back better’ from the pandemic were a welcome signal, but our new report shows that this once in a generation opportunity has not yet been taken.
More public money still goes to fossil fuels than clean energy
Since the start of the pandemic, G7 countries have committed US$189 billion to support oil, coal and gas while, by comparison, only US$147 billion has been given to clean forms of energy. The G7 Leaders’ Summit is a key moment for the UK to lead in tipping the balance towards a green recovery.
Tearfund’s new report, Cleaning up their act?, in collaboration with the International Institute for Sustainable Development and the Overseas Development Institute, shows that, as well as investing more public money in fossil fuels than clean energy, most of it has been given by the G7 countries without green conditions attached. Covid-19 recovery spending is an opportunity to clean up the polluting fossil fuel industry by applying green conditions to investments. However, more than eight in every ten dollars committed to fossil fuels came with no ‘green strings’ attached.
This is an important year for the UK’s global leadership on climate. Yet, the UK is also putting more money into fossil fuels than clean energy. Of the nearly $70 billion quantified energy-related funding commitments it made between January 2020 and March this year, 59 per cent ($41 billion) has gone to fossil fuels while only 33 per cent ($22 billion) has gone to clean energy.
Despite promising a green recovery, only four per cent of the UK’s commitment to fossil energy appears to have some environmental conditions attached. The UK government is making positive steps forward with its new, legally binding, target to cut emissions by 78 per cent by 2035, but there is a risk of missing this without greater alignment in its recovery plans.
G7 countries’ investment decisions now will have both short term and longer lasting impacts on the direction of the global economy, either accelerating the transition towards cleaner, more resilient, sustainable and equitable societies, or locking the planet into catastrophic and irreversible climate change. The green recovery we have been promised now hangs in the balance, but it is not too late to get on the right track.
There’s no common understanding of what ‘building back greener’ means
It was concerning that the G7 finance ministers didn’t outline a common understanding of what ‘building back greener’ means during their meeting last week. There were also no commitments to ensure a green recovery will be delivered.
With the G7 Leaders’ Summit approaching, the UK government has the chance to deliver a landmark moment towards a green recovery if it leads the G7 in upholding the following priorities:
- Adopt a ‘do no harm’ principle for all spending
This includes ending all support for the production of fossil fuels in recovery responses and attaching significant green strings to any remaining support given to fossil fuel intensive sectors, to assist companies, workers and affected communities in a just transition towards a future that keeps the climate below 1.5°C of warming.
2. Dedicate a minimum of 40 per cent of recovery spending to green policies
Estimates indicate only 22 per cent of the total recovery spending in the G7 countries are dedicated to green policies. A steep increase in public finance commitments to clean energy is required to enable the rapid shift towards clean energy needed to meet the 1.5°C future outlined in the International Energy Agency (IEA)’s recently published roadmap to net zero.
3. Enable a green recovery for all by giving low and middle income countries what they need
This should include ending overseas finance for fossil fuels and using the G7’s influence on multilateral development banks to align their activities with the Paris Agreement. The G7 countries should also announce a doubling of climate finance pledges, in addition to the continued easing of the debt burden faced by a rising number of low and middle income countries.
Boris Johnson has said climate change is the “golden thread” through decisions and actions in 2021. The level of climate ambition shown by the G7 will strongly influence the decisions made during the G20 Leaders’ Summit and set the scene for success or failure at COP26.
The UK has set a positive tone through its recent commitments to end all public support for overseas fossil fuel projects, and to end the sale of petrol and diesel cars by 2030 (and of new hybrid cars by 2035). But now is the time for our leaders to step up, not back. The choices made now could jeopardise international efforts to tackle climate change and accelerate the transition to a climate safe future for all. The UK will need to lead by example this weekend to make sure the G7 Leaders’ Summit really does put us on course to ‘build back better and greener’.