UK Government will continue to invest in fossil fuels overseas, despite MPs’ concerns
The Government has broadly rejected a string of recommendations from MPs aimed at decarbonising the portfolio of the UK's export credit agency, which has continually been found to be financing fossil fuel projects in developing nations.
The recommendations, put forward by the Environmental Audit Committee (EAC), concern UK Export Finance (UKEF) – the body providing Government guarantees, insurance and reinsurance to UK firms investing overseas.
Following its recent inquiry into UKEF’s environmental impact, the EAC concluded 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.
Experts told the EAC that this financing risks “locking” low-income nations “into high-carbon dependency” for years to come, by removing financial risks from fossil fuel projects. After reflecting on this evidence, the Committee argued that UKEF’s work could be jeopardising the UK’s ability to meet its Paris Agreement contributions – and, indeed, the ability of global energy systems to transform at a pace necessary to mitigate the worst impacts of climate change.
In order to buck this trend, the EAC called on the Government to end fossil fuel investment through UKEF by 2021. The Government this week revealed that it would not make such a move, claiming that doing so would “not achieve an effective or ‘just’ transition for UK workers into the low-carbon economy” and “would be too rapid to support the transition that the UK’s oil and gas industry is beginning to make”.
“ln developing countries, energy security is a key component for development and poverty alleviation and these countries will continue to need to use a mix of energy sources,” the Government’s Response paper adds.
The EAC had also recommended that UKEF should only support British businesses in projects which support its climate goals and that the Government should help the body develop a framework detailing how it will work towards net-zero operations and policies by 2050. Such moves, the Committee stated, would “align the UK’s domestic and international approaches to job creation and climate change”.
The Government refused to take either of these recommendations on board in full. On the former, it stated that “UKEF’s primary statutory mandate” is to provide “demand-led” support for UK exports. On the latter, it concluded that emissions generated by foreign, UKEF-backed projects are “owned and managed by other countries” and should, therefore, be counted abroad for exercises such as delivering Nationally Determined Contributions to the Paris Agreement Goals.
Reacting to the Government’s response, EAC chair Mary Creagh MP said its refusal to take Committee recommendations on board “completely undermines [its] commitment to get to net-zero emissions by 2050”.
“It is unbelievable that, despite an elevenfold increase in support for fossil fuel energy projects last year, the Government has rejected our call to end taxpayer money being poured into new high carbon projects by 2021,” Creagh said. “People expect their political leaders try to stop, not accelerate, the pace of climate breakdown.”
Creagh’s latter comment comes just weeks after the largest global day of Climate Strikes since Greta Thunberg staged her first, one-person protest outside the Swedish Government building last year.
On 20 September, 7.6 million people across 185 countries took part in demonstrations calling on their national governments to “unite behind the science” and set policy frameworks in line with the Paris Agreement’s 1.5C trajectory, following the IPCC’s research on the matter.
Here in the UK, party conference season has given major political parties to outline their response to the issue and build on the UK Government’s ‘Climate Emergency’ declaration.
The Conservative Party this week published its net-zero manifesto, confirming that it would maintain the 2050 deadline. Key components of the plan include tree planting, electrifying road transport and investment in nuclear fusion. Labour’s plans, on the other hand, are set against a 2030 deadline, and place a greater focus on wind power and the re-nationalisation of energy and transport networks.