In 2015, the United Kingdom joined the Paris climate change agreement; in 2016, the country committed to the United Nations sustainable development goals and finally, in June 2019, the UK passed a law dictating an end to global warming contribution, with a deadline of 2050. However, the UKEF (United Kingdom Export Finance) has been continuing to provide funding overseas, encouraging the extraction and continued reliance on fossil fuels.
In January of this year the Prime Minister, Boris Johnson, stated that the Government would end its support towards the extraction of coal overseas. However, the UKEF doesn’t currently provide financial support towards foreign coal mining or plants; they instead support the extraction of oil and gas.
BBC Newsnight reported on the UK’s financial support of overseas fossil fuels on January 23rd.
UK spend on fuel extraction overseas
While there have been investments in renewable projects, the difference between renewable and fossil fuel financial support is staggering. From 2013 to 2018 the UKEF allocated £2.5 billion of funds towards overseas fossil fuel export, compared to £104 million that went towards supporting exports of renewable energy. Of this:
- £272 million in energy support was allocated to high-income countries
- £2,361 million in energy support was allocated to low- and middle-income countries
UK spend on renewable energy extraction overseas
UK energy-related support for projects did decline between 2017 and 2018 for high-, medium- and low-income countries; while the UKEF expeditiously increased support towards renewable exports for high-income countries with:
- £68 million in energy support
- Compared to £1 million in energy support that was allocated to low- and middle-income countries
UKEF support to high-income countries for energy exports
Fossil fuel energy support to high-income countries has declined from 95% in 2013 and 2014 to 4% in 2017 and 2018. The percentage has declined year on year, except for 2016 and 2017, which increased by 15% compared to the previous year.
Renewable energy support grew from 0% in 2013 and 2014 to 96% in 2017 and 2018. In 2016 and 2017, support for this type of energy decreased by 15% when compared to the previous year, before jumping exponentially in 2017 and 2018. See Figures 1 and 2.
UKEF support to low and middle-income countries for energy exports
Unlike UK financial support for high-income countries, fossil fuel energy has received 100% of the UKEFs funding since 2013 in low- and middle-income countries; decreasing by a mere 1% in 2017 and 2018. This 1% was allocated to renewable energy extraction. See Figures 3 and 4.
UKEF response to overseas fossil fuel funding
UKEF CEO, Louis Taylor, told the Committee that he attributed UKEF’s high levels of fossil fuel support to low- and medium- income countries to three factors. Firstly, he said that the UK’s industrial capacity in the renewables sector is lower. He explained, “We just do not have the capacity to build wind turbines… We cannot support UK content where there is no UK content to support.”
Secondly, he emphasised that UKEF exists to “fill the gaps in private sector provision of finance, not to compete with the private sector.”
Finally, he argued that UKEF’s support for oil and gas should be seen in the context of a transition from fossil fuels which generate high carbon emissions (such as coal and diesel generators) to lower carbon fossil fuels, such as gas. He also emphasised that UKEF’s support represents just 0.02% of global oil and gas investment in any one year.
If the trend in reducing financial support for fossil fuel extraction overseas in lieu of renewable energy continues to grow, the UKEF may be viewed as being more in-line with the United Kingdom’s efforts towards reducing carbon emissions on their doorstep. However, there are still considerations taking place to support further fossil fuel projects overseas.