Coalition ditches green exports pledge

News comes as increase in loans to buy British exports announced

The UK government has gone back on a coalition agreement to stop guaranteeing loans for overseas buyers to purchase “dirty fossil fuels”. The coalition agreement in 2010 said that UK Export Finance will become a champion “for British companies that develop and export innovative green technologies around the world, instead of supporting investment in dirty fossil-fuel energy production.”[1]  

However, in a statement to parliament, Secretary of State Vince Cable has said the only limits on projects which can be supported will remain the same voluntary standards as existed under the previous government, which are based on those set by the World Bank.[2] This means UK Export Finance can continue backing loans for all fossil fuel projects, including deep-sea oil drilling, coal mines, oil pipelines and coal power stations. In June, UK Export Finance’s annual report revealed it has backed loans to two Russian coal mines, and has agreed up-to £1 billion of loans for deep-sea oil drilling in the South Atlantic.[3]

Tim Jones, Policy Officer at Jubilee Debt Campaign, said:
“This announcement breaks the coalition agreement to stop backing loans for dirty fossil fuels. The policy remains exactly the same as under the previous government. UK Export Finance will be allowed to support dirty fossil fuels from deep sea oil drilling and coal mines, to pipelines and coal power stations. In the Orwellian world of the coalition government, the most harmful fossil fuels are now considered to be 'clean'."

Alex Scrivener, Policy Officer at World Development Movement, said:
“This cynical move from the Coalition is a slap in the face for the millions of people in the global south already suffering from increased drought, flooding and hunger as a result of climate change. The government’s decision to apply the World Bank’s farcically lax standards on dirty energy to UK Export Finance will mean the British taxpayer backing a whole new wave of dodgy deals to finance new coal, oil and gas infrastructure.”

In a separate announcement, Chancellor George Osborne has said that UK Export Finance can expand the loans it guarantees by up-to £5 billion, through a new ‘export re-financing facility’.[4] These loans are given to overseas companies and governments to buy partly UK-made exports. If the project fails, the taxpayer can end up footing the bill.

Tim Jones, Policy Officer at Jubilee Debt Campaign:
“For thirty years people across the world have suffered from crisis caused by too much debt between countries. The UK government should be ensuring that any loans it supports are only given responsibly for useful projects which do not harm human rights or the environment. However, for many UK Export Finance loans there is no assessment of the impact of the project being supported. Until this reckless department for dodgy deals is brought into line, there should be no expansion in its lending.”

ENDS

For more information contact Tim Jones on +44(0)20 7324 4725 or +44(0)7817 628196

[1] The coalition agreement: Our programme for government http://www.cabinetoffice.gov.uk/sites/default/files/resourc
/coalition_programme_for_government.pdf

[2] See http://www.theyworkforyou.com/wms/?id=2012-07-17a.31.2&s=ECGD#g31.3

[3] The UK Export Finance Annual Report is available at:
http://www.ukexportfinance.gov.uk/news-and-events/news/
uk-export-finance-publishes-annual-report-and-accounts

[4] http://www.hm-treasury.gov.uk/press_62_12.htm