The Environmental Audit Committee has published its report into UK Export Finance (UKEF) investigating the scale and impact of financing of fossil fuels in developing countries, revealing that most of UKEF’s investment undermines the UK’s climate commitments.

The Committee found that UKEF’s activities are the ‘elephant in the room’ undermining the UK’s international climate and development targets and that UKEF should follow the lead of Sweden’s Export Credit Corporation (SEK) in introducing a 5 per cent cap on gross lending to fossil fuel operations (coal oil and gas) as a proportion of total support. As with the UK’s domestic carbon budgets, this cap should progressively reduce in size and should align with supporting net-zero emissions by 2050.

Most significantly, the Committee reports that UKEF should end support to new fossil fuel projects by 2021, and should align its work with achieving net zero emissions by 2050.

Over a five-year period, UKEF spent £2.6bn to support the UK’s global energy exports. Of this, 96 per cent went to fossil fuel projects, with £2.4bn going to fossil fuel projects in low and middle-income countries.

Environmental Audit Committee Chair Mary Creagh said: “Achieving net-zero emissions by 2050 will mean ending our addiction to dirty fossil fuels. The Government claims that the UK is a world leader on tackling climate change, but behind the scenes, the UK’s export finance schemes are handing out billions of pounds of taxpayers money to develop fossil fuel projects in poorer countries. This locks them into dependency on high carbon energy for decades to come.”

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