The government is moving closer to ending its overseas fossil fuel support
Time after time, the role of UK public finance institutions in fueling the climate emergency overseas has been exposed. Figures from UK Export Finance (UKEF), which uses public money to support British businesses exporting overseas, have shown that 97% of its energy support went to fossil fuel projects between 2010 and 2017. Our own analysis highlights the government’s use of the UK aid budget to exacerbate climate change, with £668 million of UK aid given to fossil fuel infrastructure since the Paris Agreement was signed.
Despite this, the government has so far resisted calls to end this fossil fuel support, while trying to give the impression that it is taking the problem seriously. In January, 90% of the energy deals made at the UK-Africa Investment Summit were for fossil fuel projects, despite the Prime Minister pledging to “support African countries in their transition to cleaner energy”. The UK development bank CDC Group announced in July that it would stop financing fossil fuels – only for their strategy to reveal that they would still invest in oil and gas in some circumstances. Now it is rumoured that the PM, embarrassed by increased scrutiny of the UK’s climate credentials during its Presidency of COP26, will soon announce an end to fossil fuel support via UKEF – but this might not even include gas-fired power stations.
Nonetheless, sustained pressure from civil society organisations and activists seems to be working. After being derided for signing off on UKEF’s latest investment, a $1 billion loan to a disastrous gas project in Mozambique, it seems that Boris Johnson may be on the brink of accepting our demands and ending the UK’s fossil fuel support before the COP climate talks take place in Glasgow next year. The devil, however, will be in the details.
The scale of the problem
Understanding the complete picture of how UK public finance supports fossil fuels in the global south is complex, because it happens via so many channels. Broadly speaking, the two areas of interest for campaigners have been support given by UKEF and the multiple forms of support given via the UK aid budget.
Our analysis found that £668 million of the UK aid budget had been given to fossil fuels in the four years since the Paris Agreement was signed alone. About two thirds of this support was given by CDC Group, including investments in gas power in Bangladesh, Ghana and Cameroon, oil burning power plants in Guinea and Kenya, and infrastructure for the transport of fossil fuels in Gabon and South Africa.
UKEF, however, has given even more money to climate busting projects, amounting to £3.3 billion in the years 2016-19. What’s more, 96% of the gifts and hospitality accepted by UKEF staff in the past two decades were from fossil fuel corporations, including some of the world’s biggest polluters such as Gazprom and Saudi Aramco.
Devil in the detail
Reports suggest that an announcement on UKEF is imminent ahead of COP26. However, campaigners will be paying close attention to any such announcement to ensure that loopholes and exclusions do not allow damaging investments to continue.
One possibility is that investments in gas power will still be allowed. In the past, the government has argued that gas is required to expand energy access across the global south, while also being cleaner than coal. But this is hotly contested by climate experts, who argue that gas power will both lock in high carbon emissions for years to come. Put simply, gas power will make the task of limiting global warming to 1.5oC impossible. Research by CAFOD and the Overseas Development Institute has shown that renewable energy is anyway the most cost-effective route to providing energy for two thirds of the world’s population.
But even if the government does commit to end UK financing of fossil fuels ahead of COP26, that will only be part of the solution. There is also a need to rapidly step up climate finance, not just for the necessary just transition to renewable energy, but also to compensate for the loss and damage suffered by frontline communities and for the historical emissions by major polluters in the global north (especially the UK).
Increasingly there is support for a “Global Green New Deal” which tackles global inequalities and climate crisis simultaneously. Laying the groundwork for this platform and rapidly stepping up climate finance commitments from global north nations must be a key goal for the COP26 next year. Ending fossil fuel finance won’t achieve this by itself, but it is an important step on the road to justice.
This article was originally published in Ninety-Nine, Global Justice Now’s magazine. Get it in the post three times a year when you become a member.
Photo: Environmental activists in Kenya are determined to show that coal has no place in the country’s energy future. Photo by decoalonize.org