At COP26 in Glasgow, more than 20 countries and international financial institutions launched a joint initiative pledging to end direct international public funding for all fossil fuels by the end of 2022. Italy, which co-host the Conference with the UK, chose to join the initiative at the last minute, in order not to fall behind in the international scene and finally give a first signal of climate ambition after a series of cumbersome missteps.

«The signatories of today’s statement are doing what’s most logical in a climate emergency: stop adding fuel to the fire and shift dirty finance to climate action. Only this way can we avoid the worst climate crisis scenarios. We need to see much more of this to help deliver and exceed climate finance promises and support real solutions that meet community needs – particularly in the Global South. It is great news that Italy, in its role as co-chair of COP26, has joined the initiative», comments Laurie Van der Burg of Oil Change International.

Among the signatories there are important names that weigh in the global balance: the UK, the United States and Canada. Accompanied by emerging countries such as Ethiopia, Zambia and Costa Rica, among others – and public financial institutions such as the European Investment Bank and the East African Development Bank.

If effectively implemented, this initiative could take more than $17 billion a year away from the fossil industry, Oil Change International estimates, a figure that could grow if the initial signatories succeed in convincing other countries and public financial institutions to join.

This initiative is first and foremost a step in the direction advocated by the International Energy Agency (IEA), which in recent months has surprisingly reiterated the need to stop investing in new oil and gas exploration and production. Moreover, it could open a breach in the power bloc represented by the fossil industry in our societies, a direct or indirect cause of social inequalities, militarisation of territories and environmental devastation.

However, today’s initiative is far from perfect, with a number of loopholes to be monitored and for which strong international pressure will be needed to close them, also having repercussions on the Italian political agenda, which rests on the triangle of private finance, fossil industry and public finance.

There is, however, the time issue: within a year, billions of dollars can still pass from the public sphere into the pockets of the fossil industry, in the form of loans or guarantees.

There is also talk of “exceptions in clear and circumscribed circumstances”, left to the discretion of the signatories. Lastly, there is a strong emphasis on the term ‘unabated’, i.e. everything that cannot be abated in terms of emissions: a huge loophole for all those fossil companies that would like to continue with business as usual thanks to technologies still under development such as carbon capture and storage.

A year is a long time, and the agenda of SACE – the Italian export credit agency – is full of evaluations regarding possible financing for devastating fossil projects, some of which are already at an advanced stage and others at a preliminary stage: Arctic LNG-2 in the Russian Arctic, a natural gas liquefaction mega-project in the Gydan peninsula; the EACOP pipeline, which should cut Uganda and Tanzania in two.

«Will Draghi be able to put his hands in SACE’s pockets and not in those of Italian citizens? Will he manage to get in the way of the business as usual of Eni, Snam, Saipem, Snam and Nuovo Pignone? The past leaves more cause for concern than hope», comments Simone Ogno of ReCommon. «A stop to public funding must be put in place immediately, not in a year’s time, and Italian fossil companies’ dreams of expansion must be put to bed once and for all», he concludes.

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