Last reviewed 16 October 2020
The Government has pledged £2 billion of direct lending to finance green projects overseas and promises to review controversial fossil fuel investments in developing countries.
The extra £2 billion green finance package will be used to back more renewable projects overseas, which the government says will provide new job opportunities for UK suppliers at the heart of the green industrial revolution.
Announcing the extra funding, Exports Minister Graham Stuart said: “UKEF’s huge increase in capacity can be a real game-changer for the prospects of UK exporters, and will be vital to thousands of suppliers across the country.”
The package will be managed through UK Export Finance (UKEF), which provides loans and financial guarantees to UK companies working overseas, has come under increasing criticism over its continued support for fossil fuels. A report published last year by the Environmental Audit Committee (EAC) claims 96% of UKEF’s energy investment between 2013 and 2017 went to fossil fuel projects in overseas projects, which the report describes as “unacceptably high”.
Former EAC chair, Mary Creagh MP accused UKEF of “handing out billions of pounds of taxpayers’ money to develop fossil fuel projects”, which she said undermines the government’s claims as a world leader on tackling climate change.
UKEF’s latest decision to finance £810 million in loans and guarantees for a liquid petroleum gas (LPG) pipeline project in Mozambique is reported to have infuriated the Prime Minister. According to The Times newspaper, business secretary Alok Sharma and foreign secretary Dominic Raab have also criticised the UKEF lending, citing concerns that UKEF was operating without “proper ministerial oversight”.
Earlier this year, Boris Johnson announced an end to UK investment in overseas coal projects and has ordered a review of the continued use of publicly backed government guarantees for fossil fuel projects abroad.
A new report published this month by research group Vivid Economics, on behalf of the European Climate Foundation, shows that UK Export Finance (UKEF) can support 150% to 200% more jobs in the renewable energy industries than in the oil and gas industries, rising from around 2000 jobs today to over 40,000 jobs by 2035.