Analysis by Energy Workforce President Tim Tarpley
The Paris-headquartered Organization for Economic Co-operation and Development has been meeting since Monday to discuss a proposal to end loans and guarantees from their export credit agencies to oil and gas projects. The group is made up of 38 countries that collaborate on issues of trade and finance. OECD successfully launched a similar deal in 2021 to end similar investments in coal and has intended to expand the agreement to fossil fuels.
If a deal is reached within the OECD, it could be significant, as it could disrupt the flow of billions of dollars into oil and gas projects around the world. If a deal is not cut at this meeting, it will get punted to the next round of talks, which will be held in November of next year. Notably, these discussions would take place after the elections in many of the participating countries, including the United States. These elections could potentially change the political dynamic and the chances for such a proposal to pass. The main countries that are working on the potential agreement are Australia, Canada, Japan, Korea, New Zealand, Norway, Switzerland, Turkey, the U.K. and the United States.
Analysts feel that the United States is going to be key to a potential deal being made this week. So far, the White House has not responded to questions regarding how the US plans to proceed, and the Treasury Department, which represents the United States in these OECD meetings, put out a statement that did not indicate which way the US was planning to go. At the beginning of the Biden Administration, the President took a number of steps that would seem consistent with support of this proposal. In a 2021 Executive order, President Biden instructed federal agencies, including the US Export-Import Bank, to end overseas financing of all fossil fuels. Later that year, in Glasgow, the US agreed to stop funding international fossil fuel projects before 2023. However, exceptions have been made by EX-IM bank, such as a $500 million loan guarantee for oil and gas development in Bahrain and an Indonesian oil refinery that received a $100 million dollar loan. The Russian invasion of Ukraine has also changed the politics of energy significantly. Energy security has become the primary driver in energy discussions, and many countries around the world have had to dramatically alter their energy supplies. This reality will certainly have to play into the decision of the US. Additionally, the Administration has received significant pushback, even from within its own party, on its LNG permitting “pause” and would likely face similar pushback on such a proposal. Limiting friends and allies access to natural gas power generation to replace coal fired power generation not only is counter to the energy security needs of these countries but also is counter to emissions goals.
Tim Tarpley, Energy Workforce President, analyzes federal policy for the Energy Workforce & Technology Council. Click here to subscribe to the Energy Workforce newsletter, which highlights sector-specific issues, best practices, activities and more.
