UK to end support for fossil fuel sector overseas

The Prime Minister Boris Johnson has announced that the UK will end direct government support for the fossil fuel energy sector overseas.

The 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.

This is a significant change – in the last four years, the government supported £21bn 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.

Prime Minister Boris Johnson said: “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.

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.”

Industry reaction

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 $9tn 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.”