UK Export Finance ‘undermines low-carbon leadership’ says committee

The UK’s export finance activities are undermining its international climate and development targets, says a new report from the Environmental Audit Committee.Committee chair Mary Creagh said: “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.”

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.