UK Prime Minister Boris Johnson said the government would end direct support for the fossil fuel energy sector overseas.
In what the PM office said was a major policy shift, the UK will end taxpayer support for fossil fuel projects overseas "as soon as possible, as the government works to support the sector’s transition to low-carbon energy."
The policy will see the UK end export finance, aid funding and trade promotion for new crude oil, natural gas, or thermal coal projects, "with very limited exceptions."
In the last four years, the government-supported £21 billion of UK oil and gas exports through trade promotion and export finance.
The policy will be implemented after a short period of consultation and is intended to come into force as soon as possible, and before COP26 next November, the PM office said. The consultation is expected to conclude by February 8, 2021.
The move is expected to accelerate the shift to supporting green technology and renewable energy, creating jobs across the UK and driving international growth in the industry, according to the PM office.
"The government will work with the UK’s oil and gas sector to support the move to low carbon energy sources through the North Sea Transition Deal, ensuring areas like Teesside and Aberdeen can become global hubs for wind energy, carbon capture and other clean technologies of the future," the statement further reads.
Prime Minister Boris Johnson said: "Climate change is one of the great global challenges of our age, and it is already costing lives and livelihoods the world over. Our actions as leaders must be driven not by timidity or caution, but by ambition on a truly grand scale."
"That is why the UK recently led the way with a bold new commitment to reduce emissions by at least 68% by 2030, and why I’m pleased to say today that the UK will end taxpayer support for fossil fuel projects overseas as soon as possible. By taking ambitious and decisive action today, we will create the jobs of the future, drive the recovery.
UK Export Finance (UKEF) will continue to consider applications for support in the oil and gas sector whilst the consultation is ongoing. The UK Chancellor allocated £2 billion to UKEF’s direct lending facility in the Spring Budget to accelerate its support for clean growth and renewable energy projects, meaning it can now provide direct loans dedicated to overseas buyers of UK renewable goods or services.
Deirdre Michie, CEO of Oil and Gas UK (OGUK), the representative body for the UK offshore oil and gas industry, said:
“The UK is taking a global leading role in how to tackle emissions at home, and we recognize we should do the same abroad. Our industry and its world-class supply chain built on the back of pioneering work done over decades in the North Sea, have a key role to play in delivering the Prime Minister’s ten-point plan.
“We are also in advanced discussion with the government on a North Sea Transition Deal that can provide a model for how an industry can transform in a fair way which creates jobs, boosts the economy, and delivers on the essential policy goal of net-zero emissions.
In the coming years, with support from the Government, our homegrown energy supply chain has the potential to benefit hugely from exporting the expertise it is developing in carbon capture, in hydrogen, and in decarbonizing operations.
“We need to be careful to maintain our supply chain’s competitiveness that has built up over decades of North Sea experience, through a period of rapid change.
If we are successful, the UK’s domestic leadership can reach around the world, with our industry at the heart of it. However, given the current fragility of our supply chain, this all needs to move quickly if we are to protect and sustain it as world-class.”