Stop using aid cash to invest in fossil fuels, MPs tell government

International development committee says hard to take UK government seriously on climate change

Jon Stone
Policy Correspondent
Monday 25 October 2021 21:16
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<p>The UK government’s aid finance arm invests in fossil fuels </p>

The UK government’s aid finance arm invests in fossil fuels

The government should stop using aid cash to invest in fossil fuels abroad if it wants to be taken seriously on climate matters, MPs have said.

In a striking report days before the UK hosts an international climate summit, the cross-party international development committee said the government’s investment policy “raises questions about the UK’s credibility as a ‘force for good’ and its commitment to net zero”.

The MPs say the government should use the next two years to transfer cash invested abroad in fossil fuels into renewable energy projects.

Currently the CDC, the government’s development finance arm, invests in fossil fuels projects – an approach aid charities have described as “mind boggling” and said is “undermining efforts” to tackle the climate crisis.

According to figures submitted to the committee by the group Tearfund, the CDC’s fossil fuel portfolio is worth at least £700m.

The research, which was carried out by aid charity Cafod, found that 90 per cent of CDC’s existing fossil fuel investments would be untouched by planned reforms to make investments more green, because of the scale and number of exemptions allowed.

Sarah Champion, who chairs the international development committee, said tackling global climate change "means tackling the social and economic problems of vulnerable communities most affected by it".

“There are some simple actions the government should do straight away – it’s a no brainer that it should start by ending all investments in projects involving fossil fuels," she said.

“It’s the industrialised countries that caused most of the climate change. It’s now our moral duty – as well as being in our own interests – to help clean this dangerous mess up.”

In the report, released on Tuesday, the MP say they are concerned about the broad list of exemptions in the government’s new fossil fuel policy as it raises questions about the UK’s credibility as a “force for good” and its commitment to net zero.

They add: “We therefore urge the government by 31 October 2022 to drastically scale up its investment in renewable energy abroad and to end all exemptions for direct and indirect investment in fossil fuel projects abroad through CDC and other channels apart from support for clean cooking methods for people living in poverty.”

The cross party group, which provides parliamentary scrutiny for aid spending, also say the government should “instruct CDC to publish a full list of its existing investments in coal, oil and gas and how they intend to divest from fossil fuels by 31 October 2022”.

Daniel Willis, climate campaigner at the group Global Justice Now, said: “MPs are right to call for a complete end to CDC Group’s funding of fossil fuels, including gas. For the UK to still be funding fossil fuels overseas on the eve of COP26, despite the Prime Minister’s claims to the contrary, is a total embarrassment.

“Calls for more climate finance for the least developed countries are also welcome. Rich countries have again this week passed the buck on meeting the $100 billion target until 2023, but the most vulnerable countries have been woefully underrepresented so far.

“For any chance of a just resolution at COP26, we need to see a new, increased climate finance deal that reflects rich countries’ central role in propagating climate change and their fair share of historic emissions.”

The Foreign, Commonwealth and Development Office (FCDO) has been contacted for comment on this story.

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