MPs to examine environmental impact of UK's export credit agency
The Environmental Audit Committee (EAC) has launched an inquiry into the sustainability efforts being made by UK Export Finance (UKEF), following claims that the body's financing of fossil fuels overseas is at odds with the aims set out in the UK's Clean Growth Strategy.
Founded in 1919, UKEF acts as the UK’s export credit agency, providing guarantees, insurance and reinsurance to UK firms investing overseas.
The Department has come under fire in recent years, with WWF arguing that the greenhouse gases (GHGs) emitted by the projects it supports in developing nations are inconsistent with wider UK policies on decarbonisation.
Indeed, UKEF is estimated to have provided an average of £551m in support of fossil fuel production overseas each year between 2014 and 2016 – accounting for 99.4% of all financial support offered for energy projects over the three-year period.
In order to better ascertain the volume of carbon emissions and the extent of the negative environmental impact accounted for by UKEF-backed fossil fuel projects, the EAC announced on Monday (3 December) that it had launched an inquiry into the body.
“Almost all of UKEF’s energy projects support fossil fuels overseas, which flies in the face of Government’s commitment to cut GHGs and locks developing countries into high-carbon energy production,” EAC chair Mary Creagh MP said.
“We need joined-up thinking across Government to make sure that overseas financial support does not fly in the face of UK Government’s environmental commitments.”
In addition to the impact of UKEF-funded projects, the month-long inquiry, which closes on 4 January 2019, will also explore potential alternatives to fossil fuel subsidies. MPs will ask contributors and witnesses to explain how other nations are working to support renewable energy exports, and which barriers are currently preventing the UK from following suit.
The inquiry also aims to name and shame the British companies, organisations and regions which funded fossil fuel project in low to mid-income nations abroad, and the benefits they have reaped from doing so.
Falling short on SDG 7
The inquiry launch comes after research from the International Renewable Energy Agency (IRENA), United Nations Statistics Division (UNSD), the World Bank World Health Organisation (WHO) warned that the world is off-track to meet Sustainable Development Goal (SDG) 7, clean energy for all.
Progress towards the Goal, which includes a headline target of making access to clean, modern and affordable energy universal by 2030, had been slow due to a lack of economic alignment, the report concluded, with global GDP growing nearly twice as fast as primary energy supply between 2010 and 2015.
While developing nations are showing progress towards renewable energy production – particularly in Latin America and Asia – access to this energy was found to be unequal, with poor communities in some regions still experiencing low electrification rates, the report warned.
Moreover, the report accused developed nations such as China, the US and the UK of failing to lead by example in the low-carbon transition, particularly in their respective heat and transport sectors.
In the wake of the report, the UN’s Green Climate Fund recently approved more than $1bn of funding for 19 projects supporting climate action in developing countries. However, it is estimated that around $12trn of investment is needed into renewable power generation over the next 25 years to achieve the climate goals laid out in the Paris Agreement.