Britain is curbing foreign lending to hydrocarbons


The UK government plans to stop funding overseas hydrocarbon projects on the fifth anniversary of the Paris Agreement.

The UK plans to end support for new oil, gas and coal projects. The government will provide “very limited” exemptions for some gas-fired power plants. The aim is to make this move as quickly as possible.

The Paris Agreement aims to keep the temperature rise below 2 degrees Celsius and aim for an increase of 1.5 degrees.

“Climate change is one of the great global challenges of our time and is already costing lives and livelihoods worldwide,” said British Prime Minister Boris Johnson.

“Our actions as leaders do not have to be determined by shyness or caution, but rather by ambition on a really large scale.” By taking action today, he continues, “We will create the jobs of the future, drive the coronavirus recovery and protect our beautiful planet for generations to come.”

Effects on energy

The UK launched a consultation today. This will take place with industry and various interest groups via the new policy “Information about the North Sea Transitional Agreement”. The consultation should be completed by February 8, 2021.

UK Export Finance (UKEF) may continue to examine oil and gas applications during the consultation. The agency has already stepped up its support for the renewable energy sector, the statement said.

In the budget earlier this year, the UK government allocated £ 2 billion for the UKEF’s direct credit facility. This was intended to “accelerate support for clean growth and renewable energy projects”.

Johnson is said to have been unhappy about UKEF’s support for Mozambique LNG. Friends of the earth problematic a legal challenge to the decision to support the Mozambique project.

UKEF agreed to provide $ 300 million to commercial banks through direct loans and $ 850 million guarantees. The agency noted the impact on UK businesses and said this lending would help save more than 2,000 jobs.

The UK has been linked with potential support for the East African Crude Oil Pipeline (EACOP). This will be the longest heated oil pipeline in the world. It will run from Uganda’s Lake Albert oil fields to the Tanzanian port of Tanga. Total, who leads development, has come under fire for his part in developing EACOP and Tilenga.

Johnson has taken steps to move Britain towards greener policies. The prime minister presented his 10-point plan for a green industrial revolution in November.

hypocrisy

The Chairman of the African Chamber of Energy, NJ Ayuk, described the UK’s decision as a “setback” and “highly hypocritical”. The advocacy group will “continue unshakably to stand up for the African energy sector, its employees, energy poverty and the market values ​​that make our continent attractive for committed energy investors”.

Ayuk expressed the move to end funding as an “aggressive, foreign-funded anti-African energy campaign” that is undermining Mozambique’s potential for energy generation.

“I will be returning to Mozambique personally next week and dealing with country governance and the energy industry. Dropping investment in LNG projects in Mozambique under pressure from uninformed extremist groups in the UK and claiming it is for climate change is a publicity stunt by the Johnson administration and not factual.

“This highly hypocritical decision comes at a time when Western governments should increase their investments in Mozambique and Africa instead of focusing on failed foreign aid and handouts.”

Ayuk said gas developments could help diversify African economies and improve the lives of people living on the continent.

At the same time, oil and gas companies in Africa must “do a better job of communicating their efforts to reduce carbon emissions and energy poverty” and “create opportunities for local businesses to lift people out of poverty and displace countries moving towards a better future to prevent further brain drain from the sector and Africa. “

Immediate damage

“The UK government’s goal of zero carbon emissions is to be welcomed. However, the proposal to withdraw funding from hydrocarbons, particularly in relation to emerging markets, should be carefully calibrated, ”said Abayomi Akinjide, co-head of the Fasken Global Energy Group.

“The UK government should avoid a situation where one man’s medicine becomes another man’s poison. The consultation exercise should be used to listen carefully. “

EIC CEO Stuart Broadley said the group fully supports the government’s net-zero ambitions. However, he expressed concern that “this rapid removal of support for the UK oil and gas supply chain will disproportionately affect immediate business prospects.

“The EIC is therefore committed to working with government and industry to create a structured supply chain transition to ensure UK businesses are fully supported and, best of all, can continue to export successfully around the globe.”

times are changing

Greenpeace welcomed the news. Greenpeace UK Political Director Dr. Doug Parr said the government “cannot seriously claim the cloak of climate leadership while funding climate protection projects around the world. So it’s a welcome move and an important show as the time changes for funding fossil fuel projects overseas. “

Parr went on to say that in connection with this decision to end funding for overseas oil and gas projects, the UK must take steps to help countries transition to renewable energy.

“And to end support for overseas fossil fuel extraction, the government must now build on its commitments to provide further global leadership by making a controlled transition from oil and gas exploration in the UK and the North Sea and the Supported workers concerned in the transition to good green jobs, ”he said.

The Rapid Transition Alliance, which commented before the government’s announcement, linked the end of fossil fuel support with the alignment of COP26. The UK government will host these environmental debates in Glasgow in 2021.

UKEF projects that have already been approved would result in 69 million tonnes of greenhouse gas emissions per year.

Updated December 12 at 2:25 p.m. with details on UKEF and the consultation process, plus a comment from Ayuk of African Energy Chambers and a comment from Broadley of EIC.

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