The Prime Minister has announced that the UK will end direct government support for the fossil fuel energy sector overseas, as he opened the Climate Ambition Summit on Saturday. This will see the UK end export finance, aid funding and trade promotion for new crude oil, natural gas or thermal coal projects, with very limited exceptions.
This is a significant change –in the last four years, the government supported £21 billion of UK oil and gas exports through trade promotion and export finance. The policy will be implemented after a short period of consultation and is intended to come into force as soon as possible, and before COP26 next November.
The announcement will expedite the shift to supporting green technology and renewable energy, creating jobs across the UK and driving international growth in the industry.
The government will work with the UK’s oil and gas sector to support the move to low carbon energy sources through the North Sea Transition Deal, ensuring areas like Teesside and Aberdeen can become global hubs for wind energy, carbon capture and other clean technologies of the future.
It comes as the UK prepares to co-host a virtual Climate Ambition Summit with the UN and France and in partnership with Italy and Chile this afternoon, marking five years since the landmark Paris Climate Agreement.
At least 75 world leaders – from Justin Trudeau to Narendra Modi and Pope Francis – will participate in the event, alongside the UN Secretary General, businesses such as Apple and Legal & General, city mayors and civil society groups.
The Summit is open to leaders who are ready to showcase ambitious new commitments, including Nationally Determined Contributions (NDCs) to reduce greenhouse gas emissions, strategies to reach Net Zero, climate finance pledges and innovative plans to adapt and build resilience to climate change.
It will put the world on a path to make substantial reductions in global greenhouse gas emissions ahead of COP26 in Glasgow.
Prime Minister Boris Johnson said ahead of the Summit, “Climate change is one of the great global challenges of our age, and it is already costing lives and livelihoods the world over. Our actions as leaders must be driven not by timidity or caution, but by ambition on a truly grand scale.
“That is why the UK recently led the way with a bold new commitment to reduce emissions by at least 68% by 2030, and why I’m pleased to say today that the UK will end taxpayer support for fossil fuel projects overseas as soon as possible.
“By taking ambitious and decisive action today, we will create the jobs of the future, drive the recovery from coronavirus and protect our beautiful planet for generations to come.”
Earlier this month the Prime Minister announced a new NDC, committing the UK to reduce greenhouse gas emissions by at least 68% by the end of the decade compared to 1990 levels – the fastest rate of any major economy.
The ambitious target is supported by the Ten Point Plan for a green industrial revolution, which will create and support up to 250,000 British jobs by 2030 and make significant strides in cutting emissions across energy, transport and buildings.
The UK has also pledged £11.6 billion in International Climate Finance over the next five years and is today announcing a new £10m commitment to a multilateral Green Recovery Initiative, which will support developing countries to build back better by integrating their climate commitments into economic efforts to recover from the pandemic.
We will also be submitting an ‘Adaptation Communication’ to the United Nations today, setting out what the whole of government is doing to help vulnerable countries adapt and become more resilient to the threat of climate change.
COP26 President Alok Sharma, who will close today’s summit, said, “Five years ago the Paris Agreement was the dawn of an age of hope for our planet. Today’s commitments will clearly show that we are entering a new age – one of increased climate ambition and real action.
“The world leaders who are gathering for this summit share a heavy responsibility. We know that the choices we are making today are just the start of what needs to be done to safeguard our planet.
“As President of COP26 I will work tirelessly to continue to drive up urgent emissions cuts and protect the countries most vulnerable to climate change.”
A government consultation will be launched today with industry and other stakeholders on the implementation and impact of the new policy on ending support for fossil fuels, to inform the North Sea Transition Deal. The consultation is expected to conclude by 8 February 2021.
UK Export Finance (UKEF) will continue to consider applications for support in the oil and gas sector whilst the consultation is ongoing, and has already scaled up its support for the renewable energy sector. The Chancellor allocated £2 billion to UKEF’s direct lending facility in the Spring Budget to accelerate its support for clean growth and renewable energy projects, meaning it can now provide direct loans dedicated to overseas buyers of UK renewable goods or services.
Stephanie Pfeifer, CEO of the Institutional Investors Group on Climate Change (IIGCC), said, “IIGCC welcomes the UK Government’s announcement to end direct taxpayer support for fossil fuel projects overseas. The global economic transition to net zero will be secured through both the private and public sectors committing to real action.
“The UK Government’s announcement follows the significant milestone for the financial community as 30 leading global asset managers representing assets under management of over $9 trillion today committed to the goal of net zero by 2050. We hope to see more commitments from international policymakers signalling progressive action in support of the Paris Agreement in the coming months as we look ahead to COP26.”