France will stop granting export guarantees for new fossil fuel projects from January 1 2023, according to the Finance Bill for 2023, presented on Monday, September 26, to the Council of Ministers. The government is thereby ratifying a commitment made at COP26 (United Nations Climate Change Conference) in Glasgow, Scotland in November 2021.
The end of these guarantees – which are similar to insurance covering defective performance of a contract, for example, or a foreign partner defaulting on payment – affects “the sector’s entire value chain for all fossil fuels, from upstream exploration-production to downstream refining, including transport and storage,” according to the budget documents examined by Agence France-Presse.
In October 2020, France announced that it would be ending funding for oil projects by 2025 and for gas projects by 2035. At the time, it was widely criticized by environmental NGOs, which considered this withdrawal to be too slow and warned that it would accelerate climate change.
‘Very good news’
A year later, in response to international pressure and criticism from these NGOs, France joined a coalition of countries at COP26 committing to ending foreign financing of fossil fuel projects by the end of 2022, thereby joining nations such as the United States and Germany.
However, this text did allow for some exceptions, specifically if the projects involved the use of carbon capture and storage techniques. The NGO Friends of the Earth was afraid there would be “significant flaws” in the government’s initiative if it adopted this exception, but “this is not the case,” said Anna-Lena Rebaud, who described the measure to Agence France-Presse as “very good news” and even “decisive progress.”
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There is just one drawback: “As it stands, the policy still allows support for oil and gas power plants, under the pretext that it could help with energy transition in developing countries,” said the activist. “As far as we’re concerned, this argument does not stand up, because if you invest in this type of infrastructure today you are tying developing countries to oil and gas consumption for many years to come.” The NGO therefore intends to ask for amendments to close this loophole.
Despite this measure, the 2023 budget “still leans a little too much on the side of fossil fuels,” Economy Minister Bruno Le Maire admitted on Monday, because the government has chosen to “protect” the French in response to the energy crisis. “Lots of money is being spent on gas bills,” he explained, adding that this “can only strengthen our determination to accelerate the climate transition.”
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