President Joe Biden made a significant statement at the Chancellery in Berlin on Oct. 18, 2024. This event set the stage for ongoing discussions regarding an international agreement on restricting financial support for foreign oil and gas projects. The deliberations are crucial as they aim to fulfill a promise made by the president during his first year in the White House.
Biden's Bid to Curtail Fossil Fuel Financing
Background and Context
The Biden administration is currently weighing a last-ditch effort to reach an international agreement. This comes as critical talks are set to begin in Paris. The issue at hand is a proposal by European nations to expand an existing ban on export credit agency support for unabated coal-fired power plants. Under this proposal, most oil and gas projects would be excluded from export credit agency financing.However, disagreements among U.S. officials and the U.S. Export-Import Bank have stalled action for nearly a year. A key consideration is how new curbs would affect the bank, which is an independent agency with a charter prohibiting denial of financing to any particular industry or sector. The bank is up for congressional reauthorization in 2026.Administration's Pledges and Actions
Under Biden, the U.S. has repeatedly committed to making a financial shift away from fossil fuels. Seven days into his presidency, he directed U.S. agencies to work with the Ex-Im bank and other institutions to find ways to "promote ending international financing of carbon-intensive fossil fuel-based energy." Three months later, the U.S. Treasury Department said it would work with OECD countries and other U.S. agencies "to reorient financing away from carbon-intensive activities." In December 2021, the U.S. signed onto an international declaration committing to "end new direct public support for the international unabated fossil fuel energy sector," except in limited circumstances.These pledges highlight the administration's determination to address climate change and transition away from fossil fuels.Impact and Importance
Restricting finance for fossil fuels is seen as a crucial step in curbing the flow of support for oil and gas projects. A year after the U.S. and nearly 200 other countries united behind a pledge to transition away from them, this action becomes even more significant.Supporters of the administration's actions emphasize the need to act quickly before the inauguration of Donald Trump in January. They worry that some of the administration's efforts could be reversed under a new presidency. An OECD commitment would be different, as it would be adopted by an international body and seen as impervious to opposition.The environmental group Friends of the Earth's international finance program manager, Kate DeAngelis, believes that if the U.S. moves forward with this agreement, it would be more meaningful than anything at the COP and more resistant to a potential Trump-led shift. It could potentially shift billions of dollars away from fossil fuels.Sen. Ed Markey, a Democrat from Massachusetts, has called on the administration to fulfill its commitment to end public finance for unabated fossil fuels overseas and support a strong OECD outcome. He believes that in these final weeks of the Biden presidency, the administration should take all the right actions to leave a lasting legacy on climate.In conclusion, President Biden's efforts to restrict fossil fuel financing through an international agreement are of great significance. The actions taken by the administration and the potential impact on the global energy landscape are closely watched by many. 