UK Export Finance could support 42,000 green jobs by reallocating funds from oil and gas
The UK Government's direct lending facility could support more than 40,000 jobs in the renewables sector annually by 2035, if it were to assume liabilities for renewable exports like it currently does for oil and gas, new research has found.
Research carried out by Vivid Economics, on behalf of the European Climate Foundation, has found that the UK Export Finance (UKEF) could support 42,000 jobs in the renewables sector each year by 2035, up from 2,000 today.
It could do so by matching the same support it provides to the oil and gas sector. The research report notes that the Government currently underwrites each job in the oil and gas sector at a sum of around £250,000. However, this finance could be better used to support small renewable companies.
While the oil and gas sector has warned that 30,000 jobs could be lost as a result of the coronavirus pandemic and the low oil prices, the report found that reallocating UKEF funding from oil and gas to renewables is unlikely to have a “meaningful negative impact” on current employment in the sector.
Commenting on the report, Energy UK’s chief executive, Emma Pinchbeck said: “The continuing expansion of renewables and other low carbon technologies is obviously essential to reach our climate change targets but also offers the widest economic benefits through the creation of jobs and investment in growing and sustainable specialities.
“If the UK can build on the world leading role it already has in some low carbon technologies then our businesses can reap the reward from exporting to other countries to help them meet their climate ambitions.”
The Chancellor announced in March the UKEF would receive an additional £2bn to finance clean energy projects overseas. However, UKEF is facing heavy public criticism over its spending.
Criticism arose when the Environmental Audit Committee (EAC) published the results of its enquiry into the organisation’s global environmental impact. The findings showed that 96% of the £2.6bn spent by the body to support energy exports abroad between 2013 and 2018 was funnelled into fossil fuel projects, mostly in developing nations.
Since the EAC published these findings, several think tanks and journalists have undertaken investigations to uncover further information. Global Witness this year published a report stating that UKEF’s recent financial packages include a £734m support fund for the Duqm oil refinery project in Oman, financing worth £248m for oil exploration in Brazil, £171m for an oil refinery in Kuwait, and several hundred million for power projects in Iraq. Similarly, The Guardian documented leaked UKEF plans to invest up to £1bn in major fracking projects in Argentina.
Carbon Tracker has also summarised the ways in which UKEF’s activities are “incompatible” with the Paris Agreement’s 1.5C trajectory.
Ministers are considering moves to ban UKEF from financing any new or existing fossil fuel projects overseas, following the series of high-profile exposés.