The inquiry looks 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, Mary Creagh 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.”
UK Export Finance
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, 4 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?
- 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 through the UK Export Finance inquiry page. Guidance on how to submit written evidence can be found here.