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The Guardian - AU
The Guardian - AU
Graham Readfearn

Albanese government urged to push international banks to stop funding fossil fuel development

World Bank Group logo on a wall
Activists say Australia has significant influence over international banks, including the World Bank, which it should use to encourage divestment from fossil fuels. Photograph: Bloomberg/Getty Images

Australia’s shareholdings in three international banks – including the World Bank – has seen it responsible for investing $828m in fossil fuel projects between 2016 and 2021, according to a research report.

The World Bank, the Asian Development Bank and the Asian Infrastructure Investment Bank have collectively pumped $32.85bn into fossil fuel projects – almost entirely linked to oil and gas production or power generation – over the same period, the report says.

Jubilee Australia and ActionAid, which compiled the Hidden Cash for Fossils report, are urging the Albanese government to join more than 30 countries, including the US and the UK, in signing an international agreement to stop funding fossil fuel developments and to use their influence on multilateral development banks to do the same.

Fyfe Strachan, the land and inclusive development director at Jubilee Australia Research Centre, said Australia was a major shareholder in the three development banks.

“We have a significant influence and say over the work these banks do and that comes with a level of responsibility over the actions of those banks,” she said.

The report looked at Australia’s capital contributions in establishing the banks and regular financial top ups. Australia’s shareholding translated to $828m when it came to the banks’ overall financing for fossil fuel projects.

“You can’t hide behind the fact that we can’t trace [that contribution] to specific projects,” said Strachan.

“Using aid money to finance new fossil fuel projects jeopardises the Paris agreement goals.”

All three development banks have made progress in reducing their funding of fossil fuels and have committed to bringing their operations in line with the global Paris climate agreement, the report notes.

But loopholes exist in the commitments from the banks. There is a lack of transparency around the flow of funds, with some commitments continuing to allow financing of gas projects.

Dr Susan Engel, an associate professor at the University of Wollongong and an expert on international development banks, said the investments of the banks – as well as the organisations themselves – help set global agendas, including on the climate crisis.

She said: “I think Australia is under pressure on this and there’s a lot of concern that it should be more responsible to our Pacific island neighbours that are feeling climate change most rapidly.”

The report recommends the Australian government develops an investment strategy that would rule out international financing for fossil fuel projects.

At last year’s climate talks in Egypt, the energy minister, Chris Bowen, said international development banks needed to be “wholeheartedly committed” to accelerating a transition to renewable energy.

“We have a moral imperative and driving need for our institutions to work with countries across the developed and developing world, not only to reduce emissions, but to respond to a changing climate and its economic impacts on nations,” he said.

On Wednesday a group of more than 20 environment and aid groups including ActionAid, Jubilee Australia, Greenpeace, Oxfam Australia and the Australian Conservation Foundation wrote to Bowen and the trade minister, Don Farrell, asking them to sign the international Glasgow statement.

That statement, released during the 2021 Glasgow climate talks, says signatories will “end new direct public support for the international unabated fossil fuel energy sector” and also push that position through their roles on the boards of multilateral development banks.

Strachan said it made no sense for Australia to hold ambitions to be a “renewable energy superpower” while refusing to sign the statement. Financing gas projects locked countries into “an expensive and polluting form of energy for decades” as renewables became cheaper, she said.

Michelle Higelin of ActionAid said Australia signing the Glasgow statement could drive more investment in renewable energy the world over.

“The climate crisis is having a devastating impact on women in the Asia-Pacific. Australia needs to make sure that precious taxpayer dollars don’t help make the climate crisis worse.”

Australia signing the Glasgow statement would see it join the US and UK to “catalyse greater global support for renewable energy,” she said.

Analysis suggests 45% of the nations with voting power on the World Bank had already signed the Glasgow statement. Engel said Australia’s signature could help push the bank’s board to a majority that backed ending fossil fuel financing, even though China and Russia were still major holdouts.

Australia has a director on the board of both the Asian Development Bank and the Asian Infrastructure Investment Bank. On the World Bank, Australia has a director working alternately with South Korea in a grouping representing Asia and the Pacific that includes 15 Pacific island states.

Guardian Australia has approached Bowen and Treasury for comment.

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