Climate change

Climate Hypocrites Or Investors In Development?

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Rank hypocrisy” says environmentalist group Global Witness.

Absurd” says Greta Thunberg.

Unacceptable” says the British parliament’s environmental audit committee.

The opposite of sustainable development” says Ban Ki Moon, former Secretary-General of the United Nations.

Transformational for […] economic and social development” says UK Export Finance (UKEF).

All of them are talking about the UK’s climate change strategy, specifically the country’s investment in overseas fossil fuel projects. 

This week, the UK government will be legally challenged on its commitment to the Paris agreement by Friends for Earth. This comes as the government committed its support to the large scale fossil fuel project LNG Mozambique by promising over $1 billion. Environmentalists claim that this investment is “incompatible” with the United Nations’ Paris agreement, and that the government is using taxpayer money to worsen the climate crisis. Furthermore, UKEF supposedly did not transparently assess the social and environmental impact of LNG Mozambique. 

Since the discovery of large amounts of natural gas off the coast of Mozambique in 2010, various fossil fuel projects have been developed in the region. Earlier this year, French oil giant Total signed on to supporting LNG in the biggest ever project financing in Africa. The UK’s export credit agency UKEF has committed to loans of $300m to UK companies involved in the project and $850m from commercial banks.

The Paris agreement sets out to combat climate change and refocus on actions and investments that support a sustainable, low carbon future. The central goal is to keep rising temperatures well below 2 degrees Celsius – moving towards green energy is one of the most important steps towards achieving this. Developed countries are also responsible for helping developing countries to work towards this, a principle critics say is undermined by Britain’s involvement in African fossil fuel projects.

LNG Mozambique is not the first foreign fossil fuel project the UK has supported since ratifying the Paris agreement in late 2016. Despite the government publicly stating its commitment to supporting African countries on their path to relying on clean energy, over 90% of deals struck at the UK-Africa investment summit in January 2020 were for fossil fuels. 8% of deals were related to clean energy.

This is not only problematic for the environmental footprint of the UK. Critics say this enforces fossil fuel dependency in African countries, as they are desperate for investment and this is an area foreign countries are willing to spend a lot of money on. Some have even likened the UK’s investment practices to the 19th century ‘Scramble for Africa’ (In which European powers carved up the continent between themselves), with Britain trying to dominate African markets and make a profit off of them. 

This can be considered a contradiction to the Paris agreement – specifically the section dedicated to developed countries assisting developing countries in their efforts to combat the climate crisis.

The LNG Mozambique project, amongst others, is also considered as way to outsource the issue. Whilst the UK itself may reach its goal of virtually zero carbon emissions by 2050, governmental investment is ensuring that other countries and their economic stability will still rely on emission-omitting energy sources. The UK therefore might look good on paper – at home, energy will be mostly clean – but is effectively undermining these efforts by supporting fossil fuel projects abroad. 

However, some progress has been made. Since the cross-party environmental audit committee called for the government to stop investing in environmentally damaging projects, policies to limit lending to fossil fuel projects have been introduced. The policy brief, which was received by Prime Minister Boris Johnson in early August, outlined that UKEF would no longer be able to support fossil fuel or oil refining projects from 2021. Under the new rules, projects like LNG Mozambique would no longer be funded. 

The UK government’s policy approach towards climate change is indeed contradictory. This has not just been noticed by environmentalist groups, but even by Ban Ki Moon. He called for the UK to change course in 2019 – asking the government in a Guardian op-ed to “recalibrate its export finance policy so it is fully consistent with international climate trends and obligations”. His calls back up the standpoint of Friends for Earth – the environmentalist group pursuing legal action against UKEF for investing in LNG Mozambique. 

There is some indication that the government is moving in the right direction, such as the new climate-protecting policies. However, this does not take away from its current actions – once the damage is done, it is almost impossible to undo. And damage is certainly being done at the present moment.

The government and UKEF claim their investment will aid development – the government has stated that investing in LNG Mozambique will be “transformational for Mozambique’s economic and social development”. And this may well be right to an extent – jobs will be created and income generated, both of which are important factors in development. 

However, at what cost does this development come? Fossil fuel projects are unsustainable, that much is clear. If we want to have any chance at slowing climate change, they should not be pursued any longer. Especially as the Paris agreement was ratified by the UK almost four years ago. That there may be outstanding commitments to energy deals immediately after the ratification is understandable. But that the LNG Mozambique deal was too far advanced to back out of in the summer of 2020, as the government has said, is questionable. 

By pursuing the deal, the UK government might be creating more issues than it is solving. The climate crisis will also affect economic and social development in Mozambique – for example, by harming the country’s agricultural sector which accounts for a third of the GDP. Changing or unpredictable weather is likely to negatively impact this industry. Climate change is also known to increase poverty levels and limit sustainable development. Energy poverty is also being furthered by a continued focus on fossil fuels. 

The question arises why the government is not focusing on creating opportunities for clean energy in Mozambique now. The country provides plenty of opportunities for it – over 60% of daylight hours are sunny and there is sea access. The UK would be conforming with the Paris agreement, as well as improving chances for poverty reduction and development. 

Even if 2021 sees the end of UKEF’s investments in oil and fossil fuel projects, this will not be enough. Instead, there needs to be a conscious effort to promote sustainable energy solutions, both at home and abroad. Because if the UK itself has divested, but is still investing in climate damaging practices abroad, then what is the point in the UK divesting? The government claims that the UK is showing climate leadership, but true climate leadership would include making active strides away from unsustainable energy – across the world. 

It is still unclear what will come of the legal action brought by Friends of the Earth. Reviews and reports, maybe, but tangible actions such as refusing investment currently seem impossible. However, drawing attention to the issue is important. Only then will public pressure rise and the government may have to take stronger actions in advocating for and fulfilling the Paris agreement. Like this, the UK could be a climate change leader. But there is still a long way to go until then. 

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