UK Credit Agency Investigated Over Fossil Fuel Investments

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A government credit agency tasked with bolstering the UKโ€™s export opportunities is to be investigated by parliament over its ongoing support of fossil fuelย projects.

The House of Commonsโ€™ Environmental Audit Committee (EAC), chaired by Labour MP Mary Creagh, is launching an inquiry into the UK Export Financeโ€™s (UKEF) activities in light of the UK‘s climate commitments under the governmentโ€™s Clean Growthย Strategy.

That strategy aims to lay out the pathway for the UKโ€™s economy to grow while also cutting its greenhouse gas emissions. But environmental campaigners have accused UKEF‘s activities of directly contradicting the UK‘s commitment to tackling climateย change.

UKEF has made a number of controversial investments in recentย years.

Just two days after scientists warned that immediate and drastic action was needed to curb emissions to prevent global warming of more than 1.5 degrees, UKEF announced its support for a multi-billion pound oil refinery in Bahrain. And earlier this year, UKEF announced plans to support a โ€œhigh riskโ€ multi-billion pound oil refinery inย Oman.

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

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

The Labour Party last month adopted a new policy regarding UKEFโ€™s strategy and pledged to 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€.

Launching the enquiry, EAC chair Mary Creagh said in aย statement:

โ€œAlmost all of UK Export Financeโ€™s energy projects support fossil fuels overseas. This flies in the face of governmentโ€™s commitment to cut greenhouse gases, and locks developing countries into high-carbon energyย production.โ€

โ€œWe need joined-up thinking across government to make sure that overseas financial support does not fly in the face of UK Governmentโ€™s environmentalย commitments.โ€

Adam McGibbon, climate change campaigner at NGO Global Witness welcomed the inquiry. He said:

โ€œA parliamentary inquiry into UK Export Financeโ€™s sky-high fossil fuel support is long overdue. The UK governmentโ€™s support for fossil fuels is incompatible with the Paris Agreement and with physicalย science.โ€

โ€œAt least 80 percent of all proven fossil fuel reserves need to stay in the ground in order to stop genocidal climate breakdown. There is no case for continued export finance support for fossil fuels, and we are confident that Members of Parliament will see that when they look at theย evidence.โ€

Barry Gardiner, Labour’s shadow secretary of state for international trade, told DeSmog UK he hoped the inquiry โ€œmakes the government re-think thisย policy.โ€

โ€œThe government needs to justify throwing the weight of taxpayer money behind the export credit agencyโ€™s subsidy of fossil fuelsโ€, heย said.ย 

โ€œWhen I challenged Liam Fox about this at Departmental questions in June, he dodged giving a straight answer. So Iโ€™m delighted that the Environmental Audit Committee have now taken up this issue. I look forward to seeing the Secretary of State try to defendย himselfโ€.

A UKEF spokespersonย said:

โ€œThe UKโ€™s priority, at home and abroad, is to encourage international opportunities for UK businesses โ€“ ensuring they can build fruitful relationships with overseasย partners.โ€

โ€œUKEF is committed to high standards of environmental, social and human rights risk management, and rigorously follow the requirements of the OECD Common Approaches and Equator Principles, which set the framework for export credit agencies and international financial institutions in this area. We look forward to working with theย Environmental Audit Committee on its inquiry, and will review its findings as we continue to develop our support for UKย exports.โ€

Image: Ji-Elle/Wikimedia Commonsย CC BYSA 3.0. Updated 03/12/2018: Barry Gardiner’s comment wasย added.

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