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December 17, 2020
What will the UK’s fossil fuel “ban” really mean for development?
By Katie Auth

At the recent UN Climate Ambition Summit, UK Prime Minister Boris Johnson made a major policy announcement, a move being hailed as having made the UK “the first major industrialized nation to end all public finance for fossil fuel projects overseas.” But that isn’t exactly true.

In fact, the policy makes (important) exceptions to enable energy for development in the world’s poorest countries, where climate change intersects with widespread energy poverty. The CDC Group’s new fossil fuel policy makes clear that investment in gas-to-power and associated infrastructure can still be considered as long as it’s consistent with a country’s pathway to net zero by 2050. Other exceptions include:

  • Diesel / renewable hybrid mini-grids and stand-alone diesel generators (where renewable-only systems aren’t feasible);
  • LPG for cooking and heating;
  • Carbon capture projects;
  • Transport; and
  • Industrial and economic activities that need fossil fuels (as long as they’re encouraged to transition to renewables)

The UK’s decision to make a big splash on climate while maintaining flexibility for Africa and poor parts of South Asia is both notable and justified. Fighting climate change requires rich, high-emitting countries — who take abundant, reliable energy for granted — to move quickly and decisively to reduce their own emissions.

But the world’s poorest countries deserve what’s left of the rapidly depleting carbon budget. Development finance institutions have a vital role to play in funding the solutions that will enable climate adaptation and green industrialization (including energy storage and grid infrastructure), while ensuring that countries have the flexibility to build energy systems to power inclusive, prosperous economies now — even if it means a short-term increase in their emissions.

The UK’s exceptions leave space for this flexibility, although the definition of where and under what circumstances gas-to-power will be aligned with a pathway to net zero by 2050 is yet to be determined. The policy’s ultimate impacts on energy poverty and climate justice will depend on how it is implemented — and whether the CDC and other development entities follow through on putting poor countries first.

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