Newly sworn-in Minister of Natural Resources Jonathan Wilkinson speaks during a press conference in Ottawa on Oct. 26, 2021. Ottawa is pledging to end all of its foreign financing for fossil-fuel projects in 2022.LARS HAGBERG/AFP/Getty Images
The federal government is pledging to end all of its foreign financing for fossil-fuel projects in 2022.
The decision, to be announced on Thursday morning at COP26 as part of an agreement with about 20 other countries, is the latest effort by Ottawa to use the United Nations climate conference to push back against Canada’s international image as a robust supporter of the oil and gas industry.
The commitment will place heavy pressure on Export Development Canada – which provides loans, insurance and other forms of financial backing to oil and gas companies doing business abroad – to rapidly wind down that support.
“Fundamentally, it’s not so much about how people will perceive what we’re doing, as much as it is a commitment we’ve made to do better and to go faster in the fight against climate change,” Environment Minister Steven Guilbeault said in an interview with The Globe and Mail. But he added: “It is difficult, rightly so, for many people to take us seriously when we talk about fighting climate change, when some of our institutions are still funding fossil-fuel development abroad, in developing countries.”
Natural Resources Minister Jonathan Wilkinson, alongside Mr. Guilbeault in the interview, estimated that current Canadian foreign funding for oil and gas is “in the ballpark of a billion dollars” annually. Environmentalists claim the figure is higher.
The foreign-funding pledge is distinct from a commitment made by Justin Trudeau’s Liberals during the recent federal election campaign to end domestic oil and gas subsidies by 2023. But distinctions between the two forms of support are blurry, adding to EDC’s challenge.
The ministers played down the scale of the work ahead, with Mr. Wilkinson saying the export credit agency has already “been moving in this direction, at the encouragement of the government.”
He acknowledged, though, that there is work to be done specifying what exactly is being wound down, which will be broadly worded in the international agreement, and that the pace could cause friction even among oil and gas companies that “recognize this is kind of inevitable” during a clean-energy transition.
Mr. Trudeau’s government had previously signalled some intention to end foreign fossil-fuel support through agreements made with the Group of 20, but never before with a specific date.
Mr. Wilkinson said the decision was helped by knowing that other Group of Seven countries will be part of the new declaration. He noted that includes some, such as the United States and Britain, that also have significant oil and gas industries.
The new pledge is being made just days after Mr. Trudeau began COP26 in Glasgow by announcing that Ottawa is launching the process of imposing emissions caps on the country’s oil and gas production, drawing criticism from Alberta Premier Jason Kenney.
Meanwhile, in a similar pledge also being formally announced at the conference on Thursday, a group of 190 countries including Canada has agreed to phase out coal power and end support for new coal power plants internationally, British officials have announced.
According to a press release issued Wednesday by Britain’s Energy Secretary Kwasi Kwarteng, the Global Coal to Clean Power Transition Statement will include major banks committing to end financing coal, “on top of China, Japan, Korea and the G20 commitments to end overseas finance for coal generation by the end of 2021, effectively ending all public financing of new unabated coal power.”
The announcement “marks a milestone moment in our global efforts to tackle climate change as nations from all corners of the world unite in Glasgow to declare that coal has no part to play in our future power generation.” Mr. Kwarteng said in the release.
The statement commits participating nations to end all investment in new coal power generation domestically and internationally, and scale up clean power generation. Major economies will commit to phasing out coal power in the 2030s while developing nations will have until the 2040s, officials said. There will also be financing to help countries transition from coal to clean power. That includes a South Africa Just Energy Transition Partnership worth US$8.5-billion.
A full list of participating countries is expected on Thursday, but British officials said 18 countries have committed for the first time to “phase out and not build or invest in new coal power,” including Poland, Vietnam and Chile.
Environmentalists broadly welcomed the statement but wanted to see final details.
“The breadth and depth of announcements and initiatives being announced on Thursday are an indication of how rapidly the shift away from coal is gathering pace,” said Leo Roberts of think tank E3G. “The conveyor belt taking coal to the trash can of history is moving forward. It needs to speed up further to deliver on a 1.5 C-aligned timeline.”
Canada has markedly different roles in the two new agreements. It has been among the international leaders in minimizing domestic coal usage, and along with Britain co-founded the pre-existing Powering Past Coal Alliance, which is also announcing new member countries on Thursday.
It was slower to join the deal around fossil-fuel financing, which has been in the works for months. As recently as Wednesday, environmental groups at COP26 that have been monitoring the discussions were expressing uncertainty about whether Canada would join other countries in signing on.
The absence of some world leaders from COP26 puts in doubt their ambition to tackle climate change. Adam Radwanski, The Globe’s climate change columnist, says there’s room for Canada to show its leadership around funding clean power in developing countries and other green solutions.
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