Researchers have hit out at Australia’s export credit agency for providing billions of dollars in financing to the country’s vast fossil fuels industry, with support on an upwards trajectory since 2017.

Jubilee Australia, a research and advocacy group focused on sustainability and extractive industries, says Export Finance Australia (EFA) provided as much as A$1.7bn in financing to coal, oil and gas projects between 2009 and 2020. Over the same period, it pledged just A$20mn towards renewables.

It adds that EFA financing for fossil fuels is on an upwards trajectory, rising from A$1mn in 2016/17 to A$192mn in 2019/20. The rise is partly attributed to the agency’s refinancing of loans to Japan’s Inpex in support of a major LNG project off the coast of Western Australia.

Luke Fletcher, executive director of Jubilee Australia, argues that EFA’s support for fossil fuel projects “bucks the international trend”, risks investing in doomed projects and curtails opportunities for the country’s energy sector to modernise.

“Some of the most significant projects have lost money or risk becoming stranded assets,” he says. “This is a significant missed opportunity to make Australia a renewable energy superpower. We’re taking risks on old infrastructure instead of looking forward to the future opportunities.”

The report comes amid a row over the private sector’s dwindling role in supporting Australia’s coal, and oil and gas industries.

The country is the world’s largest exporter of coal and gas, yet producers in those sectors are finding it increasingly difficult to source financing from commercial lenders.

Notably, Australia’s big four banks – ANZ, Commonwealth Bank of Australia, National Australia Bank and Westpac – have all pledged to phase out thermal coal by 2030, prompting a backlash from parliamentarians and industry heavyweights.

Jubilee Australia suggests that it is against that backdrop that public institutions “are stepping in to take on the risk” instead.

It points out that export credit agencies (ECAs) accounted for three of the top seven lenders to Australian LNG projects between 2008 and 2019, citing research by Market Forces.

The three ECAs are Japan’s JBIC, the US Export-Import Bank and the Export-Import Bank of China, which together provided nearly A$20bn of the A$75bn raised by the sector, Market Forces finds.

Jubilee Australia argues that by providing guarantees or early-stage loans to private operators, ECAs “are essential in de-risking large fossil fuel projects that the private sector might otherwise shy away from”.

Though its report notes commitments from several ECAs to scale back support for fossil fuels, the issue continues to cause controversy in other markets.

In London, UK Export Finance (UKEF) faces a judicial review brought by campaign group Friends of the Earth for its support of a highly volatile US$20bn LNG project led by Total in Mozambique.

UKEF was one of eight export credit agencies that supported that deal, along with 19 commercial banks and the African Development Bank (AfDB).

At the same time, a legal opinion commissioned by campaign group Oil Change International and published in May argues that ECA support for fossil fuel projects could breach the 2015 Paris Agreement, a legally binding treaty on keeping global warming below 1.5°C.

In Australia’s case, Dan Tehan, the government’s minister for trade, tourism and investment, says EFA’s mandate requires it to “provide commercial financing to projects that support viable Australian export trade where the private market is unable or unwilling to do so”.

“EFA assesses all transactions on a case-by-case basis and does not favour certain types of projects over others,” he tells GTR. “Between 2015/16 and 2019/20, EFA financing of all energy projects accounted for less than 5% of the total finance provided by EFA.”

Tehan declined to comment further when asked about the significant increases in support in the most recent two full financial years.

One major concern raised by Jubilee Australia is that continuing to support fossil fuels undermines plans unveiled by the International Energy Agency last month, setting out a pathway towards global net zero carbon emissions by 2050.

That plan says there should be no new oil fields, gas fields or coal mines approved for development anywhere in the world, beyond projects already committed as of 2021.

The fossil fuel industry’s focus should switch “entirely to output – and emissions reductions – from the operation of existing assets”, it says.

Professor Will Steffen, a climate change researcher and representative of Australia’s Climate Council, says: “The science is absolutely clear. To have any chance of meeting the Paris climate goals, there can be no new fossil fuel developments of any kind.”

In addition, industry experts say that continuing to concentrate public sector resources on fossil fuels risks the country missing out on longer-term opportunities to build a thriving renewable energy sector.

“The opportunities created by the clean energy transition are huge,” says Alia Armistead, a climate and energy researcher at The Australia Institute. “Renewables are the cleaner and cheaper technologies of now and the future.”

Export centres such as Gladstone “are very well placed to become renewable energy powered hubs for export industries like green aluminium, steel, cement and hydrogen”, adds Elizabeth Sullivan, a campaigner at the Australian Conservation Foundation.