If the UK is going to be a good host for COP26 and pave the way for rapid transition, its climate policies need to be more coherent – and it could start with ending financial support for fossil fuels.
Hype during 2020 that Boris Johnson’s government would end export finance to fossil fuels seems to be evaporating, as the UK attempts in other ways to boost its climate credentials ahead of hosting the critical UN climate summit in Glasgow next year. UK Export Finance (UKEF), which reportedly has given £3.5 billion in financial backing for fossil fuel projects since the Paris agreement in 2015, told the Daily Telegraph newspaper that it would, “continue to back oil and gas endeavours around the world until there was a policy change from the Government”.
These reports, which dash earlier hopes of a new government position, contradict recent announcements such as the new, more ambitious UK carbon reduction target from the Climate Change Committee and the government’s recent 10 point plan for a green industrial strategy.
The apparent failure to follow through on ending export finance to fossil fuels will have a negative impact on fossil fuel finance and carbon emissions. Signals to industry matter. Major oil companies like Shell recently signalled the intention to take climate change more seriously and begin realigning their businesses, but this initiative already seems to be falling apart, according to reports in the Financial Times and concerns raised by civil society.
Existing UKEF-backed projects will already emit approximately 69 million tonnes of GHG every year, according to the government’s own estimates. The United Kingdom Export Finance (UKEF) currently oversees up to £6bn worth of fossil fuel investments, much of which has gone to some of most prolific and powerful oil and gas companies in the world. A recent report suggests that UK government is currently underwriting each oil and gas sector job to the tune of 250k (around 2bn a year), which could better be used to support small renewable companies. Instead, export finance could support 42,000 jobs annually by 2035 in emerging renewable energy industries within the UK while, halting the support for fossil fuel projects overseas.
This is just one small part of a bigger imperative: to reallocate all finance from fossil fuels to supporting affordable renewable energy for all. Fossil fuel subsidies (which according to the IMF run at $10 million a minute globally) need to come to an end and bans on new fossil fuel extraction put in place in richer countries. Some countries such as New Zealand, Denmark, Costa Rica and Belize have shown a way forward by putting moratoria in place on new oil extraction. But, overall, governments are planning to produce about 50% more fossil fuels by 2030 than would be consistent with a 2°C pathway and 120% more than would be consistent with a 1.5°C pathway, according to the UN Production Gap report.
To complement the Paris Agreement, which does not even mention fossil fuels, we need a new international agreement to fairly phase out all fossil fuel use and leave remaining reserves in the ground. This could take the form of a Fossil Fuel Non-Proliferation Treaty, styled on the 1968 nuclear Non-Proliferation Treaty (NPT), that will seek to stop further expansion of fossil fuels and support low carbon energy pathways instead.
Such a treaty must be pioneered by the richest nations in the international community, with the largest historic carbon debt, the highest per capita emissions today and the financial clout to aid a just transition for poorer countries and communities around the world. If the UK really wanted to do something game changing, it could use its role as the COP26 host to lead such an initiative. It would be appropriate if the country that was the birthplace of the industrial revolution led the way in supporting a clean energy revolution. What better role for ‘global Britain’?
Professor Peter Newell, Andrew Simms, Freddie Daley (University of Sussex and the New Weather Institute)