But markets cannot save us from the climate crisis – in many ways they are its root cause.
Among all the backslapping and self-congratulating by international leaders at Saturday’s Climate Ambition Summit, the UK government managed to make an actually useful commitment on climate change.
Boris Johnson announced that the UK government would be “ending taxpayer support for fossil fuel projects overseas as soon as possible” in a move that was broadly welcomed by campaigners.
However, many have also showed rightful scepticism about the implementation of this policy, which will still undergo consultation early next year, and on how the UK will use these funds to support climate action instead.
Development
The campaign against UK support for fossil fuels has been active for a number of years and has seen numerous false dawns for frontline communities and activists.
As far back as 2010, the Conservative Party committed to ending UK Export Finance (UKEF) support for fossil fuels when in government – yet it has taken them over a decade in power to follow through.
In January 2020 at the UK-Africa Investment Summit, the Prime Minister committed to ending all such investments in coal mining and coal power – without acknowledging that this had not happened for a number of years anyway – whilst speaking at an event that saw £2 billion of fossil fuel investments completed.
The real scandal is in the level of UK public funds used to invest in oil and gas power as well as transport, distribution and export infrastructure to support the fossil fuel economy.
Global Justice Now found in June that, since the Paris Agreement was signed in early 2016, nearly £4 billion of public money had been given to projects such as these.
While much of that money came from UKEF, including money for fracking in Argentina and China and oil refineries in Bahrain, around £650 million came from the international development budget.
The UK’s development bank CDC Group has made investments in recent years in oil and gas power plants in Ghana, Guinea and Bangladesh, while other commitments were made through unaccountable aid funds including the Prosperity Fund and Private Infrastructure Development Group.
A commitment to end this practice is therefore welcome and a genuine step forward for the frontline communities impacted by these investments.
But markets cannot save us from the climate crisis – in many ways they are its root cause.
However, there is always a difference between warm words and decisive action, and there remain three key reasons why campaigners can’t stop holding the government to account on this issue just yet.
Small print
Firstly, there are not yet any firm details on how this policy will be implemented and on what timescale. The announcement suggests that “as soon as possible” means before COP26 takes place in Glasgow in November 2021 and could be even earlier.
With less than a decade now until 2030 - a date at which scientists believe we will know whether we can limit global warming to 1.5oC - every minute counts.
There is also the possibility that several loopholes or “exclusions” will be written into the policy to allow some fossil fuel investments under exceptional circumstances - for example, for decommissioning power plants, or investing in gas when the only alternative is coal.
Some of these exclusions could be reasonable, but not if they allow widespread investment in gas power (which is not sustainable to keep below 1.5oC) or allow indirect investments to be made via financial intermediaries.
When CDC Group recently published a new climate change strategy that limited its fossil fuel investments, CAFOD analysis suggested that 90 percent of CDC’s direct fossil fuel support would still be allowed under their exclusions.
There has also so far been no mention of a divestment strategy for the UK to exit existing investments in fossil fuel companies.
It is vital therefore that activists remain vigilant and push for the strongest policy possible when the government begins its consultation in February. Unless we get these details right, there could be space for further polluting investments in the future.
To put it crudely
That being said, we can’t just sit around and wait for that consultation to happen.
Government responses to questions in parliament have revealed that UKEF is currently considering 16 fossil fuel projects for financial support in 2021, in countries such as Brazil, Canada, Malaysia, Italy, Azerbaijan, Algeria and Iraq.
It has also been reported that UKEF is considering providing support to the East Africa Crude Oil Pipeline, a project that would transport crude oil from Uganda to a port on the Tanzanian coast, which has been opposed by local communities.
With seventeen fossil fuel projects potentially coming down the pipeline in the next couple of years, it’s vital that this policy is implemented as soon as possible and that the government is not allowed to rush through these projects in anticipation of an eventual moratorium.
The onus is on campaigners and activists in the UK to build strong links with frontline communities opposing these projects and together take a stand against state financing of ecological destruction.
Where next?
It is one thing to contest and campaign against an obvious injustice, but it can often be more difficult to reach agreement on what the alternative should be.
This is potentially the case with fossil fuel investments; while it is positive that they will be brought to an end, it is less clear how these funds can be used to support climate justice instead.
The obvious answer in some ways is to use public funds to invest in renewable energy. It is only fair to highlight that UKEF and CDC Group have made substantial investments in renewable energy in recent years.
But not all renewable technology is necessarily good for people or planet. Large hydropower projects can be incredibly disruptive to the communities who live near them.
Electric vehicles and solar panel technology rely on the increased extraction and mining of metals which have also been linked to water toxification and droughts.
Vision
So a blanket commitment to investing in renewables could, without proper scrutiny, lead to investments that are as damaging (or even worse) than supporting fossil fuels.
There are also deeper questions to be answered about how these funds should be distributed. At present, the UK appears addicted to heavily financialised models of climate finance, distributing investments through unaccountable private equity funds and issuing green bonds.
But markets cannot save us from the climate crisis – in many ways they are its root cause.
Finally, it seems astounding that an estimated 80 percent of climate finance is provided in the form of loans, meaning that historic polluters in the global north are not only not paying for the consequences of their industrialisation but are actually making money off the backs of frontline communities to this day.
A fairer approach would be to give grants, pay reparations for colonial justices, and share low carbon technology freely without intellectual property restrictions.
So far, an end to fossil fuel financing means we have achieved the easy part, although even that was no small feat. Now comes the more difficult task of constructing a detailed vision for what just climate finance looks like.
This Author
Daniel Willis is a policy and campaigns manager focussing on international development and climate justice at Global Justice Now.
