UK markets closed
  • NIKKEI 225

    28,930.11
    -628.99 (-2.13%)
     
  • HANG SENG

    29,236.79
    -643.63 (-2.15%)
     
  • CRUDE OIL

    64.04
    +2.76 (+4.50%)
     
  • GOLD FUTURES

    1,695.90
    -19.90 (-1.16%)
     
  • DOW

    30,924.14
    -345.95 (-1.11%)
     
  • BTC-GBP

    34,528.33
    -2,011.41 (-5.50%)
     
  • CMC Crypto 200

    960.96
    -26.25 (-2.66%)
     
  • ^IXIC

    12,723.47
    -274.28 (-2.11%)
     
  • ^FTAS

    3,792.09
    -16.15 (-0.42%)
     

Climate change: UK taxpayer funds will no longer be used for overseas fossil fuel projects

Suban Abdulla
·5-min read
Britain's Prime Minister Boris Johnson reacts during an event to launch the United Nations' Climate Change conference, COP26, in central London on February 4, 2020. - Britain will bring forward a ban on sales of new petrol and diesel vehicles to 2035, including hybrids, Prime Minister Boris Johnson was to announce on Tuesday. Johnson was to make the announcement at an event launching the 2019 United Nations Climate Change conference, COP26, which will be held in Glasgow in November. (Photo by Jeremy Selwyn / POOL / AFP) (Photo by JEREMY SELWYN/POOL/AFP via Getty Images)
Britain's Prime Minister Boris Johnson said that the UK aims to cut its carbon emissions by at least 68% of what they were in 1990 by the end of 2030. Photo: Jeremy Selwyn / POOL / AFP via Getty Images

The UK government will end foreign funding for oil and gas projects it announced on Saturday as it works to become a global leader on climate change.

This means that UK taxpayer funds will no longer be used to support overseas fossil fuel projects. The move could see energy projects lose billions in underwriting loans as Britain vows to end direct financing.

Over the last four years, British tax payers have supported £21bn ($27.8bn) of overseas fossil fuel developments through trade promotion and export finance.

It is the latest environmental initiative by prime minister Boris Johnson, who announced the policy at the UN Climate Ambition Summit, which Britain is co-hosting on Saturday.

Britain’s new environmental policy still allows for new oil and gas deals to be approved during a “consultation period” due to end on 8 February. There will also be “very limited exceptions for gas-fired power plants and other projects” as part of the new plan.

Climate crisis activist welcomed the announcement, calling it a “huge win for climate movement” urging other countries to follow suit.

The UK has also submitted its new national climate plan- or nationally determined contribution (NDC) - to the UN's climate body, which confirms its pledge to cut greenhouse gas pollution by at least 68% by 2030 from 1990 levels.

It’s the first time Britain has put forward its own proposal under the global Paris Agreement, as it previously came under the European Union’s plans.

The UN’s climate summit marks five years since the adoption of the Paris Climate agreement and will platform leaders who are ready to make new commitments to deliver on the goals set out in 2015.

More than 70 global leaders are set to join the UN’s climate summit. French president Emmanuel Macron is expected to address the conference, as well as Pope Francis, the secretary general of the United Nations António Guterres and Chinese president Xi Jinping.

READ MORE: Denmark to end new oil and gas exploration in shift away from fossil fuel

The UK has spent over £3.5bn over the last five years on overseas fossil fuel projects. While the UK government hasn’t set an official end date, it is thought foreign financing will end sometime next year.

Environmental groups have criticised the UK government’s support for foreign fossil-fuel projects — mainly in the form of project finance provided by UK Export Finance (UKEF) and have called it a poor use of taxpayer money.

Last year, UKEF provided over $1bn (£757m) in financial support to a liquified natural-gas facility in Mozambique, Africa. UKEF provided support through a mixture of underwriting and direct loans to the UK exporters involved.

But the project faces a legal challenge from the environmental charity Friends of the Earth (FoE), which alleges that UKEF has failed to carry out a transparent assessment of the environmental risks.

READ MORE: BP CEO says net zero plan 'not charity'

Meanwhile, European leaders pledged to slash greenhouse gas emissions by 55% across its 27 member states by 2030 compared to 1990 levels, ahead of the summit — a key step towards the EU’s goal of reaching net-zero emissions by 2050.

Johnson’s 68% vow is a big step-up compared to the EU’s previous plan, which would have seen Britain cut pollution by just 53% as part of the EU’s wider effort to cut emissions by 40% by 2030.

On Friday, the European Commission announced how many pollution permits will be removed from the EU carbon market in 2021 due to the UK's departure from the scheme at the end 2020 when the Brexit transition period ends on 31 December.

The carbon market — the EU's flagship climate policy — forces power plants, industry and airlines running intra-EU flights to buy permits when they emit planet-warming greenhouse gases.

EC president Ursula von der Leyen said on Twitter (TWTR): “Europe will reduce emissions by at least 55 per cent by 2030. It puts us on a clear path towards climate neutrality in 2050.”

It comes after tense deliberation between lower-income countries in central and eastern Europe who have historically relied on coal, and richer EU states with bolder climate ambitions.

The final document of the deal vows to offer financial aid to the lower-income EU member nations so that they can “modernise their energy systems and improve energy efficiency.”

Global governments have also committed to take further action on climate change as part of a wider plan to meet the goals of the Paris Agreement.

Last week, Denmark’s government said that it will end all new oil and gas exploration and extraction in the North Sea by 2050. The Nordic country also agreed to cancel its latest licensing round, which allows firms to search for and produce oil and gas.

The move sees eight planned licensing rounds and future tenders cancelled. This means that 2050 is the last year in which the country will extract fossil fuels in the North Sea.

Watch: UN report highlights gap between countries' climate promises, energy plans