UKEF gave £2.6 billion to support the energy sector between 2013/14 and 2017/18. Of this, 96% (£2.5 billion) went to fossil fuel projects, mostly in low- and middle-income countries. In those areas the proportion of UKEF finance allocated to high-carbon projects is not falling, the commitee said.
Witnesses told the Committee that UKEF was risking stranded assets and “locking in” reliance on fossil fuel energy production for decades to come in areas where energy demand is set to increase.
The Committee wants UKEF’s mandate to be changed by the end of the year. It said government should legislate to ensure UKEF complies with the UK’s obligations under the Paris climate agreement and other national and international climate and environmental commitments. UKEF should report on the forecast and actual emissions of all projects it supports, as well as the portfolio totals.
The committe also recommends that UKEF should leverage its position among other OECD ECAs to ensure multilateral action towards net zero emissions.