Denmark ends public financing for fossil energy abroad
The Danish Government has decided, effective 1 January 2022, to end public financing and export promotion services for fossil fuels in the energy sector abroad. With the new policy, Denmark contributes to reducing cash flows to fossil fuels and takes a lead internationally.
To propel the green transition and reduce global emissions, nations of the world must shift financing from fossil to green energy sources. Therefore, Denmark will become one of the first countries to end public financing and export promotion relating to fossil fuels in the energy sector abroad, except in very limited circumstances. This decision by the Danish Government, set to take effect from 1 January 2022, means that investments, projects and activities that promote fossil fuels in the energy sector abroad will no longer be eligible for support from Denmark.
“We must do our part to shift the international financial flows away from fossil fuels. Already last year, the Government decided to end export financing for coal-fired power generation and thermal coal. The Danish Government will now push for other governments to make similar decisions and end financing for fossil fuels in the energy sector abroad. Offshore wind, solar and green fuels are the future, and we aim to inspire other countries to promote green energy investments,” says Minister for Climate, Energy and Utilities Dan Jørgensen.
“With this decision, we are also ending export promotion services for activities by Danish companies in fossil energy. Danish companies are already delivering strong green solutions around the world, and that is the path we must continue to pursue. Denmark also supports the UK’s COP26 declaration on international support to promote clean energy transition, including the ending of funding for fossil energy abroad,” says Minister for Foreign Affairs Jeppe Kofod.
“With this decision we are making a push, through the Investment Fund for Developing Countries and the multilateral banks, to rapidly accelerate the green transition and access to green electricity in developing countries. These efforts are in line with the new Danish development policy strategy, which targets a larger share of development assistance for climate initiatives,” says Minister for Development Cooperation and Nordic Cooperation, Flemming Møller Mortensen.
Exemptions lapse in 2025
In very limited circumstances primarily relating to natural gas, certain activities will remain eligible for support until 2025. This support will be contingent upon a number of strict conditions. For example, the activities must not slow the transition to renewable energy. No other country has set such an ambitious deadline.
To achieve maximum global climate impact, the Government will advocate the implementation of similar policies by other countries.
- The Danish Government has decided to end public financing and export promotion services for fossil fuels in the energy sector abroad. The halt will take effect 1 January 2022, apart from the limited cases that will be exempt until 2025.
- The new policy will apply to export financing via Denmark’s Export Credit Agency (EKF), export promotion via the Trade Council, and investments in the Investment Fund for Developing Countries (IFU). The Government will also take a very restrictive Danish position in the multilateral banks.
- The limited exemptions until 2025 include natural gas-fired power plants in the poorest developing countries, gas for “clean cooking”, and export-related projects where natural gas is part of a transitional solution. The exemptions will only apply if a number of strict requirements are met.
- The halt does not include projects, investments or activities relating to fossil fuels outside the energy sector.
- Already last year, the Government decided to end all export financing for coal power and thermal coal.
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