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

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Jeremy Corbyn

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 general election.

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

The Labour Party made the announcement as part of its Green Transformation policy paper, which was published during the party’s conference in Liverpool.

The policy paper states that the party will “promote UK Export Finance support for the energy sector towards low-carbon projects in place of its overwhelming support for fossil fuel projects in previous years”.

Labour’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 energy sources.

DeSmog UK has previously reported on how UKEF has repeatedly been used by the government to export the UK’s polluting activities abroad and this despite the UK government’s own commitments to clean energy and tackling climate 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 trade strategy.

This is the first time the Labour Party has adopted a policy specifically related to UKEF’s activities.

UKEF: Bastion for fossil-fuel support

There is plenty of evidence of UKEF’s overwhelming support for fossil fuels projects over clean energy 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 “inconsistencies” for repeatedly denying providing such subsidies.

Earlier this year, UKEF announced plans to support a “high risk” multi-billion pound oil refinery in Oman.

UKEF’s latest annual report shows that the agency provided export risk guarantees worth £300,000 to a drilling company contracted by BP-controlled Pan American Energy to frack in Argentina.


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Last year, a joint investigation by Greenpeace’s investigation unit Unearthed and Private Eye found that UKEF had provided fossil fuel companies with £4.8bn in financial support between 2010 and 2017.

DeSmog UK’s own analysis found that UKEF gave more than £427 million to carbon intensive projects during the 2015-16 financial year 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 fossil fuels.

Reactions

Adam McGibbon, climate campaigner at Global Witness, welcomed Labour’s commitment as “a step in the right direction”.

UKEF is a blot on the government’s environmental record, providing billions in support for fossil fuel projects worldwide.

Labour’s announcement piles pressure on the government to commit to phasing out fossil fuels in UKEF. We can’t continue to fund climate change aid programmes on one hand, and make climate change worse with the other,” he said.

McGibbon’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 “UKEF’s huge subsidies for oil and gas have no place in a safe future”. 

The agency must show it can back clean industries of the future, instead of potential stranded assets like fracking and deepwater drilling,” she said.

And yet, the announcement comes as the issue of climate change was not listed as a high priority at this year’s Labour conference.

The conference’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) 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 the 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 participating in the government’s Fossil Free Sweden initiative to help mobilise capital for environmental projects and help make the country fossil-free.

Image Credit: Sophie J Brown/Wikimedia Commons/CC BY-SA 3.0

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