In his opening remarks at the UN Climate Ambition Summit last weekend, UK Prime Minister Boris Johnson announced that the UK will end direct overseas government support for projects in the fossil fuel energy sector. The policy will see the UK end export finance, aid funding and trade promotion for new crude oil, natural gas or thermal coal projects, however there are exceptions.
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What is Happening?
- While no date was set for the new policy to take effect, overseas financing will be halted “sometime next year ” and the government says that there will be “limited exceptions.” In the last four years, according to the British government, it has supported USD$27.8 billion of British involvement in overseas oil and gas projects.
- With regards to exceptions, the government says that there will be a few for gas-fired power plants and other projects, “within parameters that align with the Paris Agreement on climate change.”
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In his statement, Johnson said,“Climate change is one of the great global challenges of our age, and it is already costing lives and livelihoods the world over. Our actions as leaders must be driven not by timidity or caution, but by ambition on a truly grand scale. Decisive action today would create the jobs of the future, drive the recovery from coronavirus and protect our beautiful planet for generations to come.”
- Government support for overseas fossil fuel projects comes mainly in the form of project finance by UK Export Finance (UKEF) and has been met with much criticism for years by environmental groups that argued that it was a poor use of taxpayer money.
- The biggest energy project supported by UKEF in 2019 was a liquefied natural-gas facility in Mozambique. UKEF provided $1.15bn in financial support, through direct loans and underwriting, to the UK exporters involved. This project is facing a legal challenge from environmental charity Friends of the Earth, which has accused UKEF of failing to conduct a transparent assessment of the environmental risks.
- However, the new policy still allows for new oil and gas projects to be approved during a “consultation period” which ends on February 8, and the UKEF currently has eight oil and gas projects under consideration, which could be approved before the new policy is put in place.
Ed Miliband, shadow business secretary, said, “Ending our hypocritical position on fossil fuels financing is a basic prerequisite for being a credible host of COP26. Now ministers need to concentrate on an ambitious agreement in Glasgow which meets the goals of the Paris Accord to limit global warming to 1.5 degrees.”
Last week, the UK announced that it would cut its carbon emissions by 68% by 2030, compared with 1990 levels, which is the toughest target of any major economy.
Featured image by: Flickr
