UK’s export support agency stops investing in new fossil fuel projects

Campaigners cautiously welcomed the move but said there was more to do

The agency did not finance any new fossil fuel projects this year for the first time (PA Archive)

Environmental campaigners have cautiously welcomed a move by the UK's export finance agency to stop making new investments in fossil fuels overseas.

UK Export Finance has in the past been criticised for providing funds for British businesses exploiting oil and gas abroad – effectively subsidising fossil fuels and driving climate change.

But the government agency says from this year it is not providing any new support to new fossil fuel projects for the first time.

The organisation extends loans to British businesses wanting to work abroad to give them a competitive advantage and help them export.

UKEF has provided £7.4 billion of government support for UK exports in the last year, supporting 72,000 UK jobs and adding a gross value of £4.3 billion to the economy.

The investments cost the taxpayer nothing overall as they produce a net profit for the Treasury, in 2021-22 of £324 million.

The agency has also unveiled new carbon reduction targets for its other investments so that it it takes the carbon produced by them into account, and has confirmed it was not planning to make fossil fuel investments going forward.

Environmentalists said the change was positive but that there was more to do.

Friends of the Earth’s International climate campaigner, Rachel Kennerley, said: “While it’s good news that UKEF hasn’t invested in fossil fuel developments overseas this year, they are still financing a huge gas development in Mozambique that’s fuelling violence and climate breakdown.

“Friends of the Earth is currently challenging this ill-conceived investment in the UK courts.

“Instead, UK taxpayers’ money should be investing in Africa’s huge renewable energy potential so people without electricity have access to clean, safe energy.”

UKEF has set new targets to reduce absolute emissions (tCO2e) of its existing oil and gas sector investments by 75 per cent by 2030.

It also plans to reduce so-called "economic emissions intensity" of investments in the power sector by 58 per cent by 2030 work to net-zero basis by 2050.

On the domestic front the government has been criticised for effectively subsidising oil and gas production at home with new tax reliefs unveiled in Rishi Sunak's budget.

Anne-Marie Trevelyan, Secretary of State for International Trade, commented: “The UK is awash with untapped export potential.

"We have opened the door to the world with historic trade deals and now we are helping businesses walk through it. That’s why our national export credit agency, UK Export Finance, is boosting firms’ ability to export to the world with record-breaking support year after year.”