Ditching Fossil Fuels: Labour Pledges to Use UK Aid and Credit Agency to Support Low-Carbon Projects Overseas

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The Labour Party has pledged to help British businesses export their goods and services to boost low-carbon projects overseas and ensure UK aid does not support fossil fuel projects if it wins the next generalย election.

The policy is a clear break from current government practice which has seen the UK Export Finance โ€”ย the UKโ€™s credit agency which underwrites loans and insurance for risky export deals as part of efforts to boost international trade โ€”ย overwhelmingly finance fossil fuel projectsย abroad.

The Labour Party made the announcement as part of its Green Transformation policy paper, which was published during the partyโ€™s conference inย Liverpool.

The policy paper states that the party will โ€œpromote UK Export Finance support for the energy sector towards low-carbon projects in place of its overwhelming support for fossil fuel projects in previousย yearsโ€.

Labourโ€™s green programme also adds that the party will ensure UK aid does not support fossil fuel projects and will divest the Department for International Development away from fossil fuels and towards renewable energyย sources.

DeSmog UK has previously reported on how UKEF has repeatedly been used by the government to export the UKโ€™s polluting activities abroad and this despite the UK governmentโ€™s own commitments to clean energy and tackling climateย change.

In May, the government announced plans to increase the number of businesses benefiting from government-backed finance for exports as a key part of its international tradeย strategy.

This is the first time the Labour Party has adopted a policy specifically related to UKEFโ€™sย activities.

UKEF: Bastion for fossil-fuelย support

There is plenty of evidence of UKEFโ€™s overwhelming support for fossil fuels projects over clean energyย developments.

As part of the G20, the UK government has committed to phase out all fossil fuel subsidies by 2020 and has been accused of โ€œinconsistenciesโ€ for repeatedly denying providing suchย subsidies.

Earlier this year, UKEF announced plans to support a โ€œhigh riskโ€ multi-billion pound oil refinery in Oman.

UKEFโ€™s latest annual report shows that the agency provided export risk guarantees worth ยฃ300,000 to a drilling company contracted by BP-controlled Pan American Energy to frackย inย Argentina.


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Last year, a joint investigation by Greenpeaceโ€™s investigation unit Unearthed and Private Eye found that UKEF had provided fossil fuel companies with ยฃ4.8bn in financial support between 2010 andย 2017.

DeSmog UKโ€™s own analysis found that UKEF gave more than ยฃ427 million to carbon intensive projects during the 2015-16 financial yearย alone.

A previous analysis of UKEF figures by the Catholic International Development Charity (CAFOD) found that between 2010 and 2014, 99.4 percent of UKEF support for energy went to fossilย fuels.

Reactions

Adam McGibbon, climate campaigner at Global Witness, welcomed Labourโ€™s commitment as โ€œa step in the rightย directionโ€.

โ€œUKEF is a blot on the governmentโ€™s environmental record, providing billions in support for fossil fuel projectsย worldwide.

โ€œLabourโ€™s announcement piles pressure on the government to commit to phasing out fossil fuels in UKEF. We canโ€™t continue to fund climate change aid programmes on one hand, and make climate change worse with the other,โ€ heย said.

McGibbonโ€™s comments were echoed by Anna Markova, campaigner at energy watchdog Platform, who said the policy was the first recognition from a major political party that โ€œUKEFโ€™s huge subsidies for oil and gas have no place in a safeย futureโ€.ย 

โ€œThe agency must show it can back clean industries of the future, instead of potential stranded assets like fracking and deepwater drilling,โ€ sheย said.

And yet, the announcement comes as the issue of climate change was not listed as a high priority at this yearโ€™s Labourย conference.

The conferenceโ€™s priorities ballot, seen by DeSmog UK, shows climate change was ranked eight out of 17 priority issues behind housing, the school system, justice for the Windrush generation, Brexit, the NHS and Palestine by Constituency Labour Party (CLP)ย representatives.

Among affiliates, such as trade unions, the issue was even further down the list of priorities, ranking 10th out of 17. The top four from each list are chosen to be voted on at theย conference.

If Labour were to implement the policy, UKEF would not be the first European credit agency to go fossil-fuel free. Last year, the Swedish Export Credit Corporation announced that it was participatingย in the governmentโ€™s Fossil Free Sweden initiative to help mobiliseย capital for environmental projects and help make the countryย fossil-free.

Image Credit: Sophie J Brown/Wikimedia Commons/CC BYSAย 3.0

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