23 August 2021
The government has agreed the UK’s first state-backed green transition loan to help fossil fuel industries capitalise on net zero opportunities, with the first ever loan awarded to engineering and consultancy firm Wood Group (an Aberdeen-based engineering and energy consultancy business).
Announcing the loan, International Trade Secretary Liz Truss said the new state-backed loan scheme presents “a major economic opportunity for Britain that will drive high-value jobs in every part of the nation”.
“Wood has already made great strides in repositioning its business for a low-carbon future. I am delighted it is the first company to energise its clean growth plans using UKEF’s new Transition Export Development Guarantee, which will support thousands of green jobs,” she added.
The move marks a major shift in policy for UK Export Finance (UKEF) which had previously spent billions supporting fossil fuel projects, including financing offshore oil and gas extraction in Ghana, Colombia and Brazil. Truss had earlier rejected recommendations to phase out fossil fuel subsidies arguing that UK oil and gas companies needed the continuity of UKEF support during the transition.
Following widespread criticism from MPs and others, the UK government announced in December 2020 that it would end taxpayer support for fossil fuel projects overseas and would instead support the sector’s transition to low-carbon energy.
The new £430 million “green” commercial loan will provide Wood Group with the financial resources needed to accelerate investment in future low carbon growth areas, linked to the energy transition both in the UK and abroad.
Chief Executive at Wood, Robin Watson, said: “We are already well advanced with our own transition, deliberately broadening our portfolio across energy and supporting our clients to achieve their own carbon reduction goals.”
The loan scheme is also supported by an 80% UKEF Transition Export Development Guarantee (see Applying for a transition EDG) which was launched ahead of COP26 to enable UK exporting companies to access the financial resources they need to transition away from fossil fuels to clean energy alternatives.