Ukraine war makes fossil fuel finance pledge tricky

Ukraine war makes fossil fuel finance pledge tricky

MILAN, Nov 3 (Reuters) – The energy crisis sparked by the war in Ukraine is creating difficulties with a commitment the Italian government made last year to stop funding overseas fossil fuel projects, the country’s climate change envoy said on Thursday.

At last year’s United Nations climate change summit in Glasgow, 20 countries including Italy, the United States and Germany pledged to stop public funding for overseas fossil fuel projects by the end of 2022.

The countries are now translating the pledge into specific policies and rules for their various public funding arms, and a group of 10 European countries intend to set out what this means for their export credit agencies on Thursday.

Sources and documents seen by Reuters indicated that Rome is trying to weaken the planned statement, a draft of which would have committed to end public export finance support for fossil fuels abroad.

“The decision taken in Glasgow has delicate elements also because it was taken before … the war in Ukraine, which put the energy sector under a lot of stress. This has created difficulties implementing that decision,” Italy’s Special Envoy for Climate Change Alessandro Modiano said.

The Ukraine war has left Europe short of gas and scrambling to diversify its energy supplies away from Moscow. Geopolitical tensions have caused heightened volatility on energy markets.

Modiano, who was speaking with journalists ahead of a United Nations climate change summit in Egypt next week, said that Italy was not the only country to have doubts about the pledge and added that the country’s credit export agency SACE was studying exceptions which the Glasgow deal would allow.

“What SACE will do is to make its overseas support activities compatible with Glasgow declaration, bearing in mind that there are already exceptions that it is trying to use,” Modiano said.

The countries making up the “Export Finance for Future” group are Belgium, Denmark, Finland, France, Germany, Italy, the Netherlands, Spain, Sweden and Britain.

A report published by the group in May said the 10 countries involved had committed 29.8 billion euros in export credit support for fossil fuel projects from 2015-2020. Italy was the biggest backer of fossil fuels within the group, committing 8.4 billion euros in the period.

Reporting by Francesca Landini, Editing by William Maclean

Our Standards: The Thomson Reuters Trust Principles.

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