US & EU differ over the future of fossil fuel subsidies in OECD talks

(Financial Times, London, 26 March 2024) Second round of discussions ends without significant progress on export credit policies. The world’s richest countries are at odds over ending subsidies for oil and gas development as the US and EU differed over the extent of a ban, according to people familiar with the talks. OECD countries have held a second round of closed-door talks in Paris to debate proposals by the EU and UK to cut off most export credit agency loans and guarantees for oil, gas and coal mining projects, which are the biggest source of international public finance for the sector. This would follow an agreement in 2021 to stop providing such support for coal-fired power. A person familiar with the talks said the US was still assessing the EU’s proposals, with discussions scheduled to continue in June and November. The US Treasury declined to comment. The US, Canada, France, Germany and the UK were among countries that agreed around the UN COP26 climate summit in Glasgow in 2021 to align their public finance institutions with a Paris agreement goal to limit global warming to ideally 1.5C above pre-industrial levels. But this could affect the role of Exim, the US’s credit export agency, which will need to secure fresh funding from the US Congress in 2026, opening it to political scrutiny from Republican lawmakers who are resistant to cutting off finance for oil and gas, and progressive lawmakers critical of the bank’s climate record.