Biden Mulls Fossil Fuel Finance Curbs That Could Outlast Trump

The Biden administration is weighing a last-ditch push for an international agreement that would restrict financial support for foreign oil and gas projects before critical talks start in Paris.

Author of the article:

Bloomberg News

Jennifer A. Dlouhy

Published Nov 16, 2024  •  3 minute read

A Marathon Petroleum Corp. refinery in Detroit, Michigan, US, on Wednesday, Sept. 4, 2024. 273 workers at the Detroit refinery represented by the Teamsters Local 283 union went on strike today after several months of negotiations with the company for better pay. Photo by Jeff Kowalsky /Bloomberg

(Bloomberg) — The Biden administration is weighing a last-ditch push for an international agreement that would restrict financial support for foreign oil and gas projects before critical talks start in Paris.

Landing the deal is seen as essential to deliver on a promise President Joe Biden made his first year in the White House. But administration officials were still deciding on the final negotiating posture over the weekend, according to people familiar with the matter. That leaves little time before Monday’s negotiations among members of the Organization for Economic Co-operation and Development. 

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The deliberations were described by people familiar with the matter who asked not to be identified because they’re private.

At issue is a proposal by European nations to expand an existing, three-year-old ban on export credit agency support for unabated coal-fired power plants. Under the proposal advanced by the European Union, export credit agency financing, such as loans and guarantees, would be off-limits for most oil and gas projects.

Disagreements among US officials and the US Export-Import Bank over the best approach has already effectively stalled action on the matter at the OECD for nearly a year. A key consideration has been how new curbs would affect the bank, an independent agency whose charter prohibits denying financing against any particular industry, sector or business, the people said. The bank is up for congressional reauthorization in 2026.

Representatives of the White House and the US Treasury Department didn’t immediately respond to requests for comment on Saturday outside normal business hours.

Restricting finance for fossil fuels is viewed as an important way to curb the flow of support for oil and gas projects, a year after the US and nearly 200 other countries united behind a pledge to transition away from them.

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Under Biden, the US has repeatedly pledged to make that financial shift. Seven days into his presidency, Biden directed US agencies to work with the Ex-Im bank and other institutions to look for ways to “promote ending international financing of carbon-intensive fossil fuel-based energy.”

Three months later, the US Treasury Department said it would work with OECD countries and other US agencies “to reorient financing away from carbon-intensive activities.” And in December 2021, the US signed onto an international declaration committing to “end new direct public support for the international unabated fossil fuel energy sector,” except in very limited circumstances. 

Senator Ed Markey, a Democrat from Massachusetts, said it’s time for the Biden administration to deliver on those promises. Biden has had four years, he said on the sidelines of the COP29 climate summit in Baku, Azerbaijan. “He should finish it off.”

The administration is rushing to dole out spending under the Inflation Reduction Act and lock in more of Biden’s climate legacy before the inauguration of Donald Trump in January, yet some of those actions remain deeply vulnerable to a presidential pivot starting in 2025. 

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However, an OECD commitment would be different — adopted by an international body and seen impervious to opposition from the incoming administration. The OECD represents the governments of 37 democracies with market-based economies setting policy standards meant to promote sustainable economic growth. 

Markey said he was calling on the Biden administration to “fulfill its commitment to the Glasgow statements to end public finance for unabated fossil fuels overseas, and to support a strong OECD outcome that aligns with the targets.”

In these final weeks of the Biden presidency “they should do all of the right things,” Markey said, noting that Biden has the chance to “look so good historically as the climate president” by delivering on his “insightful, long-term” vision for finance from 2021.

Supporters prodding the administration to act are emphasizing the ticking clock on the Biden presidency — as well as Trump’s vow to unleash American oil and gas production and his threat to retreat from the Paris climate agreement.  

“If the US moves forward, this would be more meaningful than anything they will do at COP and more Trump-proof,” said Kate DeAngelis, international finance program manager for the environmental group Friends of the Earth. “It will shift billions of dollars away from fossil fuels.”

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