The Environmental Audit Committee is launching an inquiry
into UK Export Finance
(UKEF).
The Committee will investigate the scale and impact of UKEF’s
financing of fossil fuels in low and middle-income countries. It
will examine this in light of the UK’s Clean Growth Strategy,
which aims to grow national income while cutting greenhouse gas
emissions. The inquiry will look at alternatives to fossil fuel
investment and subsidies, and at the UK Government’s plans to
respond to a growing consumption of energy in middle income
nations.
Chair of the Environmental Audit Committee, MP, said:
“Almost all of UK Export Finance’s energy projects support
fossil fuels overseas. This flies in the face of Government’s
commitment to cut greenhouse gases, and locks developing
countries into high-carbon energy production. We need joined-up
thinking across Government to make sure that overseas financial
support does not fly in the face of UK Government’s environmental
commitments. Our inquiry will explore the impacts and
alternatives to UK Export Finance’s support of fossil fuels. I
encourage anyone with any insight into this area to submit
evidence.”
UKEF is the UK’s export credit agency, and an agency of the
Department for International Development. It aims to “ensure that
no viable UK export fails for lack of finance or insurance”. It
provides guarantees, insurance and reinsurance against loss.
Investment in fossil fuels in developing
countries
UKEF has a record of financing fossil fuels in low and
middle-income countries. It is estimated to have provided £551
million in support of fossil fuel production overseas per year
between 2014 and 2016. Fossil fuels make up 99.4% of all energy
support provided by UKEF in 2010-14.
Investment in fossil fuels in developing countries is
particularly damaging, locking in high-carbon dependency. Energy
consumption in developing nations is set to increase in the
coming years. Research has indicated that, to prevent
catastrophic climate change, at least 80% of proven fossil fuels
must stay in the ground.
Fossil fuel subsidies
Campaigns criticise fossil fuel subsidies for being inefficient.
They have also been blamed for exacerbating the division between
rich and poor in developing nations, as well as encouraging the
consumption of cheap electricity.
In combination with the issues surrounding fuel subsidies, and
opportunities to finance renewable energy sources, the Committee
will explore why UKEF takes the stance it does.
Terms of Reference
The Committee invites submissions on some or all of the following
points by Friday, 4th January
2019.
Financing fossil fuels in developing countries
- What
proportion of UKEF’s overseas investment currently supports
fossil fuel projects? What proportion supports renewable energy
or carbon neutral project? Where are these investments made?
- Which UK
companies and regions benefitted, and which UK institutions
participated?
- What is the
impact of fossil fuel investment overseas which is supported by
UKEF?
- How do
subsidies play a role in financing fossil fuels overseas?
Potential alternatives
- What
alternatives exist to fossil fuel subsidies?
- Which
countries do a good job of supporting renewable energy exports?
What do they do well?
- What can be
done to remove the current barriers to investing in alternatives
to fossil fuel projects?
Current policy landscape
- Do current
strategies support the UK Government’s Clean Growth Strategy, the
UK’s international climate change commitments, and the UN’s
Global Goals for Sustainable Development?
- Does the UK
Government have a plan to phase out fossil fuel subsidies
overseas? What actions should they take?
- What actions
have been taken by the World Bank and Asian Infrastructure
Investment Bank to prepare for the expected increase in energy
demand from developing countries?
Written evidence submissions to the inquiry can be
made here. Guidance on how
to submit written evidence can be found here.
