Government to end billions in taxpayer support for overseas fossil fuel projects

The Government will end support for fossil fuel projects overseas, the prime minister will announce on Saturday, as it emerged that £50m in taxpayers money was used to support Russian coal mining last year.  The UK will become the first major economy to end taxpayer backing for overseas oil and […]

The Government will end support for fossil fuel projects overseas, the prime minister will announce on Saturday, as it emerged that £50m in taxpayers money was used to support Russian coal mining last year. 

The UK will become the first major economy to end taxpayer backing for overseas oil and gas projects, promising to introduce a ban before it hosts the COP26 climate summit in November next year. 

In the last four years, the Government has supported £21 billion of UK oil and gas exports through trade promotion and export finance.  

In 2019, export finance agency UKEF committed £59.9m for coal mining, its biggest support for the sector in the last ten years. 

That included over £50m in credit guarantees to support the purchase of mining equipment for use in Russia. 

The funding came shortly before the Government announced in January this year that it would end all direct support for coal projects abroad. 

It left open the possibility of funding for oil and gas projects, but has since faced growing accusations of hypocrisy over the use of taxpayer money to back polluting projects overseas as the UK seeks to present itself as a climate change leader. 

Earlier this week, The Telegraph revealed UKEF was poised to underwrite an oil pipeline project in East Africa that would be responsible for the same emissions as all UK flights. 

The announcement, which Boris Johnson will make as he hosts a virtual climate summit to mark five years since the Paris Agreement, will include “very limited” exceptions for gas-fired power plants and other projects. 

The prime minister is expected to call for “ambition on a truly grand scale” as he encourages new commitments from leaders to meet the Paris goals of limiting warming to at least 2C, and ideally 1.5C. 

Campaigners welcomed what they said was a long overdue move, which went further than many had expected, and called for other countries to follow suit. 

France has said it will end export guarantees for fossil fuels, but not until 2025 for oil and 2035 for gas, and has not extended the ban to other overseas funding. 

Dr Doug Parr, policy director at Greenpeace UK said it “really is a welcome move and an important show of times changing.” 

New oil and gas projects will still be considered before the end of the consultation period in February, amid concern among ministers over the impact on jobs. 

The Government currently has no overarching plan for the transition of oil and gas workers into the renewables sector, but said the ban on fossil fuel funding would “expedite the shift”. 

But there are concerns there could be a rush to sign off projects before the ban comes in. UKEF alone has a further 15 potential projects, including one in Brazil linked to Petrobras offshore oil exploration.

“Now that we’ve seen what the project pipeline is, there could be now an acceleration for some of those to reach financial close,” Louise Burrows, a policy adviser on fossil fuel transition at think tank E3G. 

The Government is already facing judicial review over its decision to provide £800m to back a major gas project in Mozambique, where it has fuelled a violent insurgency, which campaigners at Friends of the Earth said they would continue to pursue. 

Clara Goldsmith, campaigns director of The Climate Coalition, which represents 140 organisations including the RSPB and the National Trust said: “The support for fossil fuel development overseas has been a stain on the UK’s climate reputation this year and this ban will help to restore it.“

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