G20 nations funnel $151bn of Covid-19 recovery funding into fossil fuels

The largest contributor to unconditional fossil fuel financing is the US

That is according to the latest data from the Energy Policy Tracker, updated on Wednesday (15 July).  

The data reveals that G20 nations have spent at least $120.5bn (£95.5bn) providing unconditional support for fossil fuel firms since Covid-19 was declared a pandemic in March. The largest contributor to this sum is the US, which has provided $58.1bn (£46.1bn) alone.

A further $30.25bn (£24bn) has been provided on a conditional basis, the majority of which was allocated by France.

When both unconditional and conditional support is accounted for, the G20 has spent $32.89 (£26.11) per capital bailing out the fossil fuel sector. In comparison, the per capita spend on support for low-carbon energy generation and energy efficiency to date is $19.33 (£15.34).

Regarding the UK specifically, Ministers have confirmed  $13.38bn (£10.6bn) for the low-carbon energy generation and energy efficiency sectors. The majority of this funding has been allocated unconditionally, including the Treasury’s £3bn energy efficiency programme announced last week.

Nonetheless, Whitehall has provided $4.84bn (£3.8bn) of unconditional support for the fossil fuel sector – more than Italy, Mexico, Turkey, Australia, Russia and South Africa.

Lobbying and oil lock-ins

Energy Policy Tracker’s update comes shortly after new analysis from InfluenceMap concluded that the oil and gas sector lobby has been the most active and the most successful since March.

Across Australia, Canada, the US and the EU, oil and gas lobbying bodies made 31 policy interventions between the start of March and the end of June. Almost two-thirds were successful.

Green groups have warned that, in addition to lobbying, plummeting oil prices could hamper the best intentions to deliver a ‘green’ recovery.

The IEA has estimated that oil demand will be one million barrels less per day in 2020 than in 2019. Oil prices dipped below zero for the first time since the industrial revolution in April as producers struggled to grapple with disruption to the energy and transport sectors.

From laggards to leaders?

In a bid to bring companies facing significant environmental challenges on board with the net-zero transition post-Covid-19, BNP Paribas Asset Management has this week launched a new equity fund designed to help high-impact firms align with the Paris Agreement and the Sustainable Development Goals (SDGs).

Called the Environmental Absolute Return Thematic or ‘EARTH’ fund, the fund will support between 25 and 45 businesses.

It will invest in scale-up companies capitalised at more than $1bn each, who are working to develop innovative solutions for the world’s most environmentally damaging sectors – materials, agriculture, industrials and energy. Such companies will be paired with larger firms that operate using “unsustainable or technologically inferior business models vulnerable to transition risk”.

In order to ensure that holdings are not creating unintended negative consequences for the environment or society as they advance decarbonisation, all holdings will be mapped according to the SDGs. BNP Paribas’ sustainability strategy notably commits it to align operations with the SDGs and to help ensure the carbon intensity of the global energy sector falls by 85% by 2040.

“We believe that companies positioned to help address the significant environmental challenges we face will outperform those that either take no action or indeed contribute to these issues,” BNP Paribas’ co-manager for the EARTH fund Edward Lees said.

“The latter will increasingly be at risk of having stranded assets and will be forced to take write-downs.  Meanwhile, as population growth boosts demand for food, water and energy, causing increasing CO₂ emissions, waste production and unsustainable consumption, the market for solutions to meet these needs could amount to trillions of dollars and will be increasingly encouraged by governments.”

Sarah George

Comments (4)

  1. Ken Pollock says:

    Very interesting comments from Sarah George, but one or two points not very clear. Brent Crude prices went from around $60 a barrel last August as low as $20 a barrel in late April, but have now recovered to around $43 a barrel. That is they dropped to about a third of the last summer price, but have now recovered to70% of that price. The only mention we get is that the prices are "plummeting"!
    Then, when it comes to investing in low carbon and efficiency measures, the G20 are spending 37% on such measures, while the UK is spending 73.6% on them. Why does one get the impression from the text that we are doing worse than the G20?

  2. Keiron Shatwell says:

    Don’t forget that oil & gas are NOT JUST FOSSIL FUELS. They are the building blocks for billions of everyday products, from clothes to medical masks, from insulation to IVs, from car parts to carpets, that we all use daily and all want in our modern technological society.

    Imagine a world without the plastic components of your smartphone, wifi router, fridge freezer? A world without the refrigerants that cool our food and lifespaces or heat them if you have a heat pump? A world without medical equipment, PPE and even medications.

    While we can not afford to continue to waste the hydrocarbon reserves we have left by burning them we will continue to need to find and develop these resources to maintain our standard of society for decades to come. Eventually, maybe, some of these plastic and synthetic materials may be made from renewable source chemicals but oil & gas will be playing a part in life for generations to come.

  3. Sarah George says:

    Hi Kieron, we are well aware of fossil fuels’ use in the materials sector and have recently been covering BP’s petrochemicals/plastics plans. However, the US EIA records that 69% of all oil sold in 2018 was used as transport fuel. In comparison, 27% was used by the industrial and commercial sectors for material. We are not a campaigning organisation for a complete fossil fuel phase out, but a media platform serving sustainability professionals in all sectors – including materials and fuels. Hope this helps!

  4. Keiron Shatwell says:

    Sarah – I appreciate that and I know Edie themselves are not a campaigning organisation however you must admit that the "headlines" on any story about people or organisations investing in oil and gas do read like something from XR or Greenpeace and tend to lean towards the sense of being anti oil industry.

    All I am trying to remind people is that not all oil & gas is burnt. Yes a lot is but that figure is slowly coming down (which is a good thing). The main thing is that if we don’t continue to invest in oil & gas exploration and production then our modern, technological society will fall to our knees (quite literally if Lycra stops being made).

    As I work in the Oil & Gas industry it is something I know more about than others and it is the main bugbear I have with a lot (not all) of the "green" hysteria so I hope you don’t mind if I stand up and shout for our corner in all this. After all it is oil based chemicals that build solar panels, coat wind turbines in corrosion resistant paint and make components for electric vehicles.

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