A deal to end government funding of offshore oil projects – which Canada led the world on – has died in the eyes of unsolicited countries and the incoming administration of US President-elect Donald Trump.

Canada, along with the UK and the European Union, provided in 2023 to end financing through export credit unions – government agencies that support foreign trade – for oil and gas projects abroad and divert the money to clean energy instead.

The US led by President Joe Biden supported the agreement after the presidential election in November last year, starting a debate to find an agreement before the inauguration of Trump. In the end, it wasn’t enough time.

The Organization for Economic Co-operation and Development (OECD) has confirmed in its statement to CBC News that an agreement has not been reached even after many months of negotiations.

In the OECD, the relevant agreement is required for any agreement to take place. In addition to the delay in US aid, other countries that were in Turkey and South Korea, for strong security and economic concerns.

Trump, who has expressed his desire to expand oil drilling and is filling his cabinet with oil-loving leaders, is unlikely to support such a deal to lower oil prices.

Nina Pušić, chief export economist at Oil Change International, an advocacy group that is closely following the talks, said “it’s a big opportunity for climate change.”

“I think the big picture is that if we want to achieve the goals of the Paris Agreement, we need our public money to finance a strong and fair transition, rather than digging a very deep hole,” Pušić said. .

How public finances contribute to the risk of fossil fuel costs

The decision made by the OECD, a group of 38 developed countries, is based on the promise made at the 2021 climate conference of the UN in Glasgow to eliminate these types of fossil fuels and divert the money to clean energy.

The proposal was aimed at a specific type of aid for the past – that provided by international financial institutions. It’s the government’s funding that helps bring back jobs that can be risky and have trouble getting start-up capital from investors and banks. When public funding comes in, projects can have an easier time getting private funding.

In Canada the agency is Export Development Canada (EDC), which provides financing, sales and insurance to foreign companies that affect Canadian businesses, with the goal of promoting trade between Canada and other countries.

“One of the reasons why credit unions export is so important is that they eliminate the risk of losses. So they provide a loan guarantee or some kind of project cover, which calls for investment from the private sector,” said Pušić.

“That’s why they play an important role in the environment by supporting the fossil fuel industry.”

For example, the US Export-Import Bank, provided a loan of 500 million US dollars for an oil project in Bahrain in 2024 and a 100 million US dollar loan for oil production in Indonesia in 2023. In the last days of the Biden administration, the bank to be accepted another $500 million US for a large power plant in Guyana.

Why did some countries agree?

One of the events, South Korea, canceled the talks due to concerns about its domestic industry supporting natural gas (LNG). South Korea is the world’s second-largest producer of fossil fuels, closely related to LNG carriers, which transport oil around the world.

“However, given the global energy transition already underway, Korean companies that focus on traditional projects will find themselves left behind,” said Dongjae Oh, who leads research on the gas industry at Korean think-tank Solutions for. Our Season.

“The best thing to do to stay competitive is not to invest in renewable energy projects,” he said.

Korean officials also expressed concern that the country was not ready to transition from fossil fuels to demand for its own energy, and it needed more time, according to O. He also said that Korea has spent 10 billion US dollars in the global economy for 2020-2022, and the money it can go up.

The way forward for nations

Kate DeAngelis, deputy director of economic policy at the advocacy group Friends of the Earth US, said countries like Canada that support the proposal should continue to negotiate despite the political shift in Washington.

“It’s important to remember that under the first Trump administration, OECD countries were able to strengthen the coal restrictions that were in place,” DeAngelis said.

“These governments can’t use that as an excuse to just drop the ball.”

In 2023, Canada announced that it would part out “Inadequate” subsidies for fossil fuels – money that encourages more emissions and hinders the transition to cleaner energy. Despite this, report and the advocacy group Environment Defense found that Canada is still spending billions on oil and gas subsidies.

Meanwhile, EDC he promised to eliminate the costs of operating the oil industry in the world, and by a chief financial officer domestic fuel and natural gas.

DeAngelis said that even without an OECD agreement, countries could double down on existing pledges by removing pressures and actually reducing overall aid costs.

“States are very good at making promises. The hardest part is making sure they actually follow through,” DeAngelis said.