UK to end support for fossil fuel sector overseas: What does it really mean for business in the UK?

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Following the news that the UK will be ending its support for the fossil fuel sector overseas as part of its plans for a greener economy, Business Leader spoke to some industry experts and what it could mean for the economy, the future of business and where investors will look to provide funding.

Ricky Knox, Co-Founder and CEO of Tandem Bank

The recent statement from the UK government that they will end financial support for overseas fossil fuel projects is the latest bold move which reflects a bigger trend taking place all around the world.

Since the signing of the Paris Agreement in 2015, climate change has been a stable subject of debate for many politicians around the world, investment is flowing into green initiatives at an ever increasing rate, and the green agenda is gaining more and more attention in the media worldwide. In the UK, for example, Prime Minister Boris Johnson announced his Ten-Point Plan for a Green Industrial Revolution, extended the Green Home Grants till March 2022 and launched his Green Recovery Fund to build back greener from the Covid-19 pandemic.

2020 has seen our daily lives turn upside down. Coronavirus has had some devastating consequences around the world but it has also made people much more aware of their environment and surroundings.

With these conditions already in place at a macro level, there has never been greater potential for green banking pioneers to lead the way to a better and more sustainable future. Tandem Bank was founded with the mission of helping to solve real people’s money problems and so this notion of sustainability, both financial and environmental, has been at the heart of our business from day one.

With the recent acquisition of green lender Allium, we will be able to offer environmentally conscious consumers a full proposition of green spend, save, borrow and invest solutions. A new green instant access savings account and green mortgages are already planned for next year.

Matthew Knight, Head of Low Carbon Solutions, Gemserv

Gemserv welcomes the UK governments announcement to end financing and support for overseas fossil fuel projects.

The new policy 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’.

Prior to this, the government supported £21 billion of UK oil and gas exports through trade promotion and export finance, so Gemserv welcomes this significant change in policy and looks forward to its implementation ahead of COP26 in Glasgow.

This decision reflects the UK’s strong domestic decarbonisation policy, bolstered recently through a series of green stimulus measures, and underlined by the PM’s announcement to cut GHG emissions by 68% by 2030 based on 1990 levels.

Continuing to commit billions of pounds to overseas fossil fuel projects would clearly weaken the UK’s position as a leading force against Climate Change, globally.

Gemserv further believes that the announcement will also encourage investors to further support the shift to a green economy, creating jobs across the UK and driving international growth in the low carbon industry.

Steven Redmayne, COO, Green Energy

The ending of support for overseas fossil fuels is a welcome change and likely comes as a shock to many people that the UK still supported overseas fossil fuels in this day and age. A diverse fuel mix is imperative to a stable energy economy but this does not need to include fossil fuels.

A greater focus needs to be placed on the electrification of heating and transport, both overseas and closer to home to reduce the demand for fossil fuels.

With the UK’s new target of a 68% cut in emissions by 2030, the UK should use its position as a hive of innovation and technology in the renewable and low carbon energy space to promote this throughout the world.

David Roberts – Managing Director – Nu-Heat Underfloor Heating & Renewables

  1. REDUCE the temperature of heating systems installed in the UK.

The Future Homes Standard talks about flow temperatures of 55 degrees, but this doesn’t go far enough. Turning down the heat to 45 degrees saves a further 0.5 tonne CO2 per property and across 250,000 new build homes per year, if even half have underfloor heating systems and air source heat pumps installed, those properties would save an additional 55,000 tonnes of CO2 over 18 years! Low temperature heating, like underfloor, will give us this by default.

As BEIS recognise, hydrogen-heating, electric heat pumps and bioenergy boilers are likely to all play a role in the decarbonisation of heat. The move to low-temperature systems will improve the efficiency of all technology options and therefore the costs of the energy transition.

  1. SUPPORT installers through clear standards and training.

We’ve got an amazing plumbing and heating trade in the UK – we trust them in heating in our homes. The plan talks of 50,000 new jobs, but what is really needed is government support for the 130,000+ Gas Safe Registered installers we’ve already got.

We need to help them make the transition from gas to heat pumps through funding for training, regulation, and access to support schemes, like the one Nu-Heat provides.

We’ll need qualified people to both install, service and maintain these low carbon systems.

  1. EDUCATE a fabric first approach

Missed opportunities in building regulations mean that high temperature heating systems are being installed in homes that just don’t need them. It’s essential that both the market and consumer understand the need to wrap and then heat. A fabric first approach to both new builds and renovations.

Getting supportive regulation for heat pumps in new-build properties right is important, as this is where the technology is immediately cheapest to install and typically most cost-effective. A thriving mass-market for heat pumps needs a healthy installer-base and supply chain to sell renewable heating technologies and install systems. The heat pump industry sees new-build properties as an important first step for wider adoption of the technology in the UK.

Can we do it though? I think we can.

Businesses, families and governments across the globe throughout this Covid-19 pandemic have proved how good we can be at taking action in crisis and just how much can be achieved in a small amount of time.

Before we entered this public health crisis we were – and still are – in the midst of a climate emergency.

“As a nation now is the time to turn our attention towards decarbonising heat in our homes.”

The biggest challenge? This has to be building a trained and certified low carbon heating workforce who are strong enough in number to meet the demand and confident enough to grow the public’s trust and we at Nu-Heat are going to do everything we can to help to make this happen.

Prof. Peter Newell, Professor of International Relations at the University of Sussex

“Boris Johnson’s declaration that the UK will end export finance to fossil fuels is a welcome move ahead of the critical UN climate summit in Glasgow next year. The move will a have a positive impact on fossil fuel finance and carbon emissions. UKEF-backed projects will 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 powerful oil and gas companies in the world.

But 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 following the lead of New Zealand, Costa Rica and most recently Denmark. 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. As host of the next climate summit and the birthplace of the industrial revolution, it could now lead the way in supporting a clean energy revolution. What better role for ‘global Britain’?

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