A new report by Jubilee Australia has found that Australia’s export credit agency has given around 80 times more financing to fossil fuels than to renewables.
And that trend could continue, as Trade Minister Tehan on 24 June announced forthcoming changes to legislation which could give EFA even more ways to finance fossil fuel projects.
Between 2009 and 2020, Export Finance Australia (EFA) provided financing of up to $1.69 billion to coal, oil and gas but only $20 million to renewables.
Disturbingly, financing to fossil fuels has increased from lows of one million in 2016/17 to $192m in 2019/20, partly due to the refinancing of the massive Ichthys LNG project.
This bucks the international trend with private and government-backed lenders ruling out coal and reducing oil and gas funding.
“As much of the world moves away from financing fossil fuels, Australia could be one of the few countries still willing to finance new fossil fuel projects,” said Luke Fletcher, Executive Director, Jubilee Australia.
“Over the last decade, more than a billion dollars of money backed by Australian taxpayers has gone to finance fossil fuel projects here and overseas. Some of the most significant projects have lost money or risk becoming stranded assets.”
“This is a significant missed opportunity to make Australia a renewable energy superpower. We’re taking risks on old infrastructure instead of looking forward to the future opportunities.”
In addition, it appears the $5 billion Northern Australia Infrastructure Facility (NAIF) could be increasingly used to fund fossil fuel projects. NAIF announced its first approval for a coal mine, a $175 loan for the Olive Downs coal project in Queensland on 1 July 2021. NAIF is not required to consider greenhouse gas emissions when lending to projects. Legislation passed in May allows NAIF to fund projects directly, without checks by State or Territory governments.
“Since being stopped from using NAIF to fund Adani, the Federal Government has changed the rules and this could mean more public money flowing to increasingly risky fossil fuel projects that will damage the climate.”
We call on Australia to end all public financing of fossil fuels through EFA and NAIF. We also call on Australia to drastically improve the transparency of these two public project financing banks, as they have been operating under a veil of secrecy for far too long.
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SELECTION OF QUOTES FROM EXPERTS
Alia Armistead, Climate and Energy Researcher, The Australia Institute
Last year the Australian Government gave $10.3 billion in subsidies to coal, gas and oil companies. The world’s appetite for fossil fuels is waning, yet alarmingly this report shows that Australia is determined to keep underwriting fossil fuels for export with public money, even when there’s no market for them.
The opportunities created by the clean energy transition are huge. Renewables are the cleaner and cheaper technologies of now and the future, yet our Government insists on funding technologies of the past.
Australia exports more than double its annual domestic emissions in fossil fuels. Even if we don’t include those emissions in our domestic accounting, we are responsible for the damage they cause.
Tim Buckley, Director of Energy Finances Studies, The Institute for Energy Economics and Financial Analysis (IEEFA)
Against the global shift away from fossil fuels, Australia stands out as a global laggard, not just denying the climate science but actively undermining the growing global consensus by introducing yet more fossil fuel subsidies - taking us in the opposite direction. Moreover, as private insurance plus debt and equity capital flee this growing stranded asset risk - the Australian government is stepping in, putting Australian taxpayers on the hook to undermine our global treaty obligations.
At the same time as the G7 announces an end to public funding of new coal, Australia's government finance organisations, NAIF and EFA, and now potentially the CEFC and ARENA as well - are underwriting otherwise unbankable and unviable fossil fuel projects. Jubilee Australia's report is a timely assessment, putting some transparency on this Federal Government financial debacle.
Professor Jeremy Moss, Professor of Political Philosophy and Director of the Practical Justice Initiative at the University of New South Wales
Australia’s huge financial support for fossil fuel projects through NAIF and EFA is unconscionable given the climate crisis.
As one of the world’s largest fossil fuel exporters Australia should not be further contributing to climate harms through these largely hidden subsidies to fossil fuels.
Elizabeth Sullivan, Climate and Exports Campaigner, Australian Conservation Foundation
Propping up the declining fossil fuel sector with public money does a disservice to regional workers and our natural world when there is great potential for growth in new labour-rich, green export industries.
Research shows export centres like Gladstone are very well placed to become renewable energy powered hubs for export industries like green aluminium, steel, cement and hydrogen. Australians understand the need to transition to the safe, clean industries of the future, but in order to be globally competitive, we need to start now.
Professor Will Steffen, Climate Council spokesman and climate change expert
Australia continues to throw public money at polluting fossil fuels, which are driving climate change, and is dragging its feet on setting a net zero target while the rest of the world is racing ahead. The science is absolutely clear. To have any chance of meeting the Paris climate goals, there can be no new fossil fuel developments of any kind. As one of the sunniest and windiest countries on earth, Australia should be accelerating investments in renewable energy and storage technologies which can bring down emissions while creating clean jobs and strengthening our economy.
About Jubilee Australia Research Centre
Jubilee Australia Research Centre engages in research and advocacy to promote economic justice for communities in the Asia-Pacific region and accountability for Australian corporations and government agencies operating there.