Policy Recommendation #1: Support divestment of international financing of fossil fuels
Policy Recommendation #2: Successfully drive overseas investments for fossil fuels out with integrity and transparency
Policy Recommendation #3: Aspire for integrity by strongly targeting residential and transport sectors through imposing strict deadlines for transitioning towards renewables
Policy Recommendation #4: Clearly distinguish fossil fuel components within climate finance and enact provisions which effectively ensure their path towards renewables
During the Climate Ambition Summit of December 2020, the United Kingdom’s Prime Minister announced the country’s end to directing taxpayer money in the form of export finance, aid funding, and trade promotion towards supporting the fossil fuel sector. This is a key policy announcement in line with the goals of the 10-point Energy White Paper plan and the NDC goal of reducing national emissions by at least 68% by 2030 compared to 1990 levels. Additionally, this decisive goal aligns with the UK government’s overseas development bank (the CDC) aiming to end fossil fuel financing abroad and support net zero pledges as well as the plan to phase out the manufacturing of vehicles with internal combustion engines by 2030. The UK’s 10-point plan include advancing offshore wind, low-carbon hydrogen, nuclear power, zero emission vehicles, green public transport, greener buildings, and green finance.
With the UK leading the G7 and hosting the COP this year, this policy announcement is expected to come into force sometime between February 2020 and November 2020 (following a short period of consultation before COP26) where the UK will be hosting the world’s key actors in leading the global climate change mitigation effort as well as showcasing its own progress. A direct impact of this new goal will be re-directing funds towards renewable energy projects rather than fossil fuels. As an example, $27 billion in the last four years were supported by the government for oil and gas exports. HSBC and Barclay’s banks lead as Europe’s largest financiers of fossil fuels, the former having spent at least $87 billion since the 2016 Paris Agreement.
The first challenge comes with integrity: can the UK effectively deny permits for oil and gas-based development in foreign countries based on the assertion that they have phased out domestic gas and oil industry (with over 300,000 employees)? The Department for Business, Energy and Industrial Strategy (BEIS) is tasked with reviewing whether the UK’s oil and gas licensing regime is net zero. It states that fossil fuels will still be used for heating and cooking for the near future, whereas transportation is expected to progressively adopt full electrification. Both of these sectors are relatively equal as the dominant consumers of energy in the country. Other sectors where fossil-based carbon is used to produce include medicines, cosmetics, cleaning products, and plastics. Before the MP’s announcement, the Oil & Gas Authority (OGA) UK watchdog published a strategy focusing mostly on energy efficiency rather than transition towards other energy sources and citing a much larger emission abatement role from hydrogen and CCUS than projected by the UK’s Climate Change Committee. One key area for aiding the UK to be phase out domestic oil and gas is ensuring just transitions. The North Transition Deal represents an effort to support workers in this industry during transition periods to low-carbon systems, notably seizing the opportunity of global wind energy hub. Scotland is playing its part in shouldering employees moving alongside the green transition with a Green Jobs Fund of £100m and a National Transition Training Fund of £25m. These will train unemployed or at-risk persons to acquire relevant skills for innovative and renewable energy sectors.
A second key challenge has to do with strictly distinguishing between fossil fuels and renewable energy as well as disassociating it with development aid. HSBC, mentioned above, has committed up to $1 trillion in green financing to clients transitioning to more environmentally friendly operations. Whether such a transition period would integrate the message of urgency echoed throughout the Climate Ambition Summit remains to be seen. In other news, the country’s state-owned export credit agency, the UK Export Finance, has been committing billions of pounds to overseas fossil fuel projects, the largest proportion of which fall to low or middle-income countries. The issue for UKEF will be slowing down the momentum of incoming applications (17 are currently in process, as well as one to support the East African Crude Oil Pipeline [EACOP]), although £2 billion have been allocated to UKEF’s direct lending facility for its support of clean growth and renewable energy projects. Auditing groups for UKEF will help address this issue of transparency: specifically, the Environmental Audit Committee and Global Witness. In light of the COP26 priorities to channel private finance towards developing countries, it is unknown to what extend fossil fuel and renewable energy company pledges could muddle the process. This is complicated with the COP’s Public Climate Finance of leveraging multi-lateral action (either banks, institutions or funds) to develop low-carbon initiatives, many of which remain anchored in fossil fuel systems. “Climate resilient sustainable development” can entail strengthening logistical or infrastructural capacity and summoning fossil fuel-powered industries to expand flood defences.
A New Agriculture Bill
- Introduce a novel bill incentivising legume production and consumption and greening measures while restricting support systems for farms solely dedicated to animal meat production
- Similar to coal industry, support animal farming for a just transition
- Create positive fallbacks and import legislation from such a bill within international trade system
- Possibly amend Environment Bill with clear provisions linking financial incentives with emissions monitoring and greening measures
The goal of this policy will be to help farmers transition away from animal agriculture to help steer the economy towards one protecting the environment. British farmers receive £3.4 billion a year in subsidies under the EU Common Agricultural Policy. These basic payment schemes that support British farmers could start decreasing as a result of Brexit. The UK can take this opportunity to fully shift over to a new Agriculture Bill by 2028.
According to the most up-to-date data from the UN Food and Agriculture Organization, reported in 2018, livestock in the EU and the UK were responsible for the equivalent of around 502 million tonnes of carbon dioxide per year, due mostly to the release of methane. Meat and dairy production and consumption has risen steadily over the past few years. While agroecological schemes may play a part in significantly reducing emissions from the cattle industry, consumption plays a far more important role. Climate mitigation initiatives to reduce the impact of animal agriculture and farming on the environment have largely been left out of national climate policies in the UK. The absence of such policies will make it harder for the UK to reach net-zero by 2050 let alone reducing emissions levels by 68% by 2030. Farming in the UK is responsible for 10% of all GHG emissions according to the National Farmers Union. This figure does not account for indirect emissions related to the feed needed for cattle such the ongoing destruction of the Amazon rainforest in order to plant soybean to be shipped to Europe. Many UK companies are directly incentivising Brazilian soy animal feed traders to expand their operations.
The UK Department for Environment, Food and Rural Affairs (DEFRA) recently stated that innovations in agriculture will “move closer to a future where farmers are properly supported to farm more innovatively and protect the environment.” The 25 Year Environment Plan broadly states that food must be produced “sustainably and profitably” and notes that farming is the primary cause of degrading over 30% of Sites of Special Scientific Interest (SSSIs). The Environment Bill of 2019-2021 alternatively focuses on improving air quality, water, biodiversity, resource efficiency, and waste reduction.
DEFRA must design and implement policy that puts explicit emphasis on shifting away from animal agriculture and encourages farmers to grow plant-based protein alternatives. This shift can be supported by changing subsidy regimes to reflect the weight of emissions of different agricultural activities or measuring natural capital from sound agri-environmental schemes, where farmers who switch to growing legumes and pulses resources are rewarded. Societal consensus and priorities revolving around diet choices as these impacts the environment are becoming more commonplace, and at the very least trends are pointing towards reducing meat consumption. In its Sixth Carbon Budget, the CCC clearly states as a key recommendation the necessary reduction in meat and dairy consumption by 20% by 2030 and with more pronounced reductions. GHG emissions variables measured over ten-year periods as attributed to overall agriculture, livestock, and consumer habits can contribute to reporting the environmental impact of such a shift.
It is important to set up the scheme in such a way that it does not disadvantage UK farmers and simply lead to an increase in animal protein imports, effectively displacing emission responsibility to producer countries. This is particularly pertinent in a time where the UK is seeking new trade partnerships with the United States, a country which has long tried to introduce chlorinated chicken products in the UK. This challenge can be addressed through closely monitoring the quality and type of food imports. The UK could go so far as increasing tariffs or imposing trade barriers due to standard setting (for instance maintaining its ban on chlorinated meats). A second challenge relates to the livelihood of farmer communities. Subsidies must aid local farmer communities and households transitioning to plant-based farming the same way that energy policies are now placing significant support systems behind the shift towards renewables. Furthermore, these policies must be put in place in such a way that vulnerable communities in the UK that are already food insecure are not further marginalized.
Right Honourable Alok Sharma, President for COP 26
Address: House of Commons, London / SW1A 0AA
Phone: 020 7219 7131
This post was submitted by UK country managers Gwen Wren and Thomas Christensen
Image: Dago Galdieri, Bloomberg via Getty Images