MPs on the Environmental Audit Committee have urged the export credit agency UK Export Finance to end its “unacceptable” level of support for foreign fossil fuels industries. The ministerial department is aimed at boosting UK exports by providing guarantees, insurance and reinsurance.
The committee report, out today, said that over a five-year period the agency spent £2.6bn to support the UK’s global energy exports – of this 96% (£2.5bn) went to fossil fuel projects, with £2.4bn going to fossil fuel projects in low and middle-income countries.
UKEF’s activities are the “elephant in the room undermining the UK’s international climate and development targets” the report said.
Mary Creagh, chair of the EAC, said: “Achieving net-zero emissions by 2050 will mean ending our addiction to dirty fossil fuels.
“The government claims that the UK is a world leader on tackling climate change, but behind the scenes the UK’s export finance schemes are handing out billions of pounds of taxpayers’ money to develop fossil fuel projects in poorer countries. This locks them into dependency on high carbon energy for decades to come.
This is unacceptable. It is time for the government to put its money where its mouth is and end UK Export Finance’s support for fossil fuels.”
The report noted that in 2017-18 96% of UKEF’s energy support to high income countries went on renewables and 4% to fossil fuel projects. By contrast, just 0.46% of UKEF’s energy support to low- and middle-income countries in 2017-18 went to renewables and 99.4% went to fossil fuel projects.
The EAC pointed out that while the UKEF has made some progress by phasing out support for coal, many other export credit agencies have gone further. The Swedish equivalent agency caps its fossil fuel operations at 5% of total lending while in Canada new legislation means its agency must disclose climate-related risks in export finance decisions.
Mike Childs, head of science at environmental campaign group Friends of the Earth, said: “We’ve heard our government’s rooftop shouting around ambition on emissions reduction in the UK, but for too long this has simply meant outsourcing a lot of high carbon projects overseas.
“Climate breakdown is a global crisis that is already hitting the most vulnerable communities the hardest, so it’s crucial that UK finance is divested completely from planet-wrecking fossil fuels.”
A UK Export Finance spokesperson said: “The UK government fully recognises the importance of tackling climate change and the need for a mix of energy sources and technologies as the world transitions to a low carbon economy.
“We welcome the committee’s report and are working with colleagues across government to consider our response.”
Read Vanessa Perez Cirera deputy leader of WWF’s global climate and energy practice’s blog for PF on why countries must stop subsidising fossil fuels.
