UK support for energy in developing countries

UK support for energy in developing countries (2010-2017) (£ million)

UK support for energy in developing countries (2010-2017) (£ million)

Burning polluting fossil fuels is the main cause of the greenhouse gas emissions causing climate change, which is hitting the poorest communities hardest. Phasing out investment in fossil fuels and scaling up support for renewable and efficient energy systems to reach 100 per cent by 2050 will be critical for remaining under 1.5°C of global warming.

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Access to modern energy can also play a key role in delivering other sustainable development goals (SDGs), including those on health, education, inclusive economic development and gender equality, as well as wider environmental sustainability. SDG 7 aims to ensure universal access to affordable, reliable, sustainable and modern energy by 2030.  Billions of people still do not have access to electricity or cook with polluting solid fuels. Indoor air pollution can have devastating health impacts, particularly for women and children.

Eighty-seven per cent of people without electricity live in rural areas, far from centralised electricity grids, in what is called the ‘last mile’. A least-cost assessment indicates that for them to access electricity, over two-thirds of investment should be in distributed (off-grid and mini-grid) solutions powered by renewable energy (DRE).

Currently there is a financing gap for energy access, and particularly for DRE and clean cooking solutions.  International public finance from donor countries like the UK has a vital role to play in plugging this gap and in supporting poorer countries to shift or leapfrog to renewable and efficient energy systems that benefit everyone, including the world's poorest people.

Ask the government to stop funding fossil fuels overseas

Since 2016, CAFOD in collaboration with the Overseas Development Institute (ODI) has analysed UK public support for energy in developing countries to see if it is aligned with the UK’s climate change and development goals.  Our latest research using an updated methodology analyses UK support for energy to developing countries in the period 2010–11 to 2017–18. This includes the years after the UK’s adoption of the Paris Agreement and the SDGs in 2015.

Our latest reports on UK support for energy in developing countries

Key Findings
  • Between 2010 and 2017, the UK provided support for energy in developing countries with a total value of £7.8 billion.
  • 60% of the UK’s support for energy in developing countries in this period was for fossil fuel energy.
  • An estimated 97% of UKEF support went to fossil fuel development, principally oil and gas exploration and production in upper-middle-income countries.
  • More Overseas Development Assistance (ODA) support for energy went to renewable energy than to fossil fuels, but almost a quarter of ODA support (22%) was for fossil fuel development.
  • Less than 5% of overall support for energy and less than 12% of ODA support went to energy access for poor groups. More than 95% of the support for energy access was ODA.
  • While the ODA support for energy access increased almost fivefold, the rate of increase in total ODA support for energy was much higher.

Recommendations

In light of the findings, our key recommendations for the UK government are as follows:

ODA support for energy

  • Place a moratorium with immediate effect on any new UK Overseas Development Assistance (ODA) investments in fossil fuels at all stages of energy delivery and through all channels, including indirect investments by the Commonwealth Development Corporation (CDC).
  • Review any existing fossil fuel investments, using a transparent methodology. Where there is an overwhelming business case that energy investments are needed for poverty reduction, alternative low-carbon energy investments should be identified. The results of this review should be announced by COP25 in December 2019.

Non-ODA support for energy

  • Commit to end UK Export Finance (UKEF) support to fossil fuel projects by 2021, following the Environmental Audit Committee (EAC) recommendation and building on the UK’s leadership in the Powering Past Coal Alliance.
  • Undertake a strategic review of current UKEF energy support including consideration of appropriate support for a just transition for workers and communities at home and abroad who may be affected by a phase-out of UKEF fossil fuel support. The results of the review and the phase-out plan to be announced before COP26 in December 2020.

UK support for energy access

  • Scale up significantly energy access as a proportion of UK energy support to help meet the current access financing gap.
  • Focus support on those countries with the largest populations living without access to clean cooking or electricity – the ‘high-impact countries’ (HICs).
  • Prioritise investments in DRE and clean and efficient cooking fuels and technologies as the least-cost solutions for the most energy-poor people.
  • Provide more support for research and demonstration of effective financing and business models, enabling policies and integrated and inclusive planning and delivery to scale up energy access for poor and vulnerable groups.

All forms of UK support for energy

  • Going forward, adopt a ‘whole-portfolio’ investment approach to ensure UK energy support via all channels, both ODA and non-ODA, is fully aligned with achieving net-zero emissions by 2050 and with implementing the SDGs.
  • Adopt a clear and consistent screening process for individual energy investments, with robust safeguards for mitigating climate, environmental and social risks and mandatory human rights due diligence for companies seeking export finance. This should apply to indirect investments, such as those made by CDC, as well as to direct investments, with transparent reporting on impacts, including for energy access impacts

For more information on the latest report

For more information on the 2010-17 figures see:

 UK support for energy in developing countries 2010-17

2010-17 report infographics

UK support for energy in developing countries 2010-17 source data tables

If you see an error message or can't see the table you can open the source table here

UK support for energy access 2010-17 source data tables

If you see an error message or can't see the table you can open the source table here

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