US joins vow to block flow of tax funds to fossil fuel projects abroad

The United States was among 20 countries that announced an agreement at the COP26 climate conference Thursday to end funding of fossil fuel development abroad.

In an agreement announced Thursday, nations including the U.K., Switzerland and Italy announced an end to any new public financial support for the fossil fuel energy sector by the end of 2022. The agreement makes an exception for “limited and clearly defined circumstances that are consistent with a 1.5°C warming limit and the goals of the Paris Agreement.”

“[I]nvesting in unabated fossil-related energy projects increasingly entails both social and economic risks, especially through the form of stranded assets, and has ensuing negative impacts on government revenue, local employment, taxpayers, utility ratepayers and public health,” the announcement adds.

Parties to the agreement “will encourage further governments, their official export credit agencies and public finance institutions to implement similar commitments into COP27 and beyond,” the statement adds.

Other signatories include several African and island nations, which comes as conference participants have warned those regions are on the front lines of the crisis and require immediate actions. Mali, Fiji, Ethiopia and the Marshall Islands all joined the agreement.

Several major emitters are not listed as signatories to the agreement, including China, the world’s number-one emitter; India, the third largest and Russia, the fourth largest. Chinese President Xi Jinping announced earlier this year that Beijing will end international backing of new coal projects.

U.S. officials, including climate envoy John Kerry, have repeatedly emphasized the need for cooperation from India and China for meaningful emissions reductions. Indian and Chinese leaders, meanwhile, have pointed to their relatively recent industrialization compared to Western powers such as the U.K. and the U.S.

In the U.S., President Biden ordered a temporary pause on new oil and gas leasing on public lands in January. A federal court ordered an end to the pause over the summer, and the Interior Department has resumed lease sales even as the government appeals the decision.

The announcement is separate from another agreement announced at COP26, in which 18 countries announced they would no longer invest in coal projects domestically or internationally. Parties to the agreement committed to ending coal power by the 2030s in the case of major economies and, in the case of developing economies, by the 2040s.