Legal Digest
3 min readDec 15, 2020


Dried Up: UK Announces it will End Financial Support for Fossil Fuel Projects Overseas.

What’s the story?

Prime Minister Boris Johnson recently announced that the UK will end financial support for overseas fossil fuel projects in the build-up to the COP26 (Climate Change Conference). The announcement came at the Virtual Climate Ambition Summit, which the UK co-hosted alongside the UN and France. Although, it is worth noting that no implementation date for this policy has currently been set.

Boris Johnson described the threat of climate change as:

a challenge far worse, far more destructive even than the coronavirus”

Over the last 5 years the UK government’s support for overseas fossil fuel projects has totalled £3.5bn. This support came mainly in the form of project finance provided by the UKEF (UK Export Finance).

For example, last year UKEF provided roughly £1bn in support of a natural gas facility in Mozambique. Interestingly, and rather mysteriously, Mozambique is exempt from the this new policy.

The new policy also leaves several other questions unanswered. For example, the government stated that there will be “limited exceptions” to the new policy. It will be interesting to see what is meant by ‘exception.’ In addition to this, there is also a ‘consultation period' which ends on February 8, during which time the UK government can approve new fossil fuel projects.

Rachel Kennerley, a campaigner for Friends of the Earth was critical of the scope to circumvent the government’s new policy, she stated:

These are exemptions, these loopholes, and when it comes to oil and gas, there can be no exemptions.”

It is worth noting that, at the time of writing, UKEF currently has eight oil and gas projects under consideration which in theory could be approved before the new policy comes into effect.

How does this affect law firms?

Regarding law firms, I believe there are two main effects that this policy will have.

Firstly, for firms who act on behalf of fossil fuel project financiers, this new policy will be damaging. The UK government’s practice of underwriting loans would have given lenders greater confidence in loaning money on what are otherwise risky projects. The removal of this function from the UKEF will perhaps make lenders more apprehensive of loaning capital, therefore reducing the demand for firms who specialise in fossil fuel project finance. Firms and their clients may also be wary that the UK’s announcement is a signal that the move away from fossil fuels is gathering speed. The EU’s pressure on Poland to transition away from coal can be seen as an example of this. Firms will also be conscious of incumbent President Joe Biden’s commitment to end subsidies for the oil industry. In 2017, this was worth $6bn to foreign fossil fuel projects.

Secondly, firms who act on behalf of environmental pressure groups will likely see this as an opportunity to hold the government accountable to their commitments. I anticipate that there will be future action regarding the previously mentioned ambiguities. In particular, the exclusion of Mozambique from the policy is certainly an area which I believe will be subject to legal challenge. I previously mentioned the UKEF’s £1bn funding towards a fossil fuel project in Mozambique, the reader should be aware that this was challenged by Friends of the Earth under the Paris Climate Agreement. However, this was underlined by the argument that the government’s “climate hypocrisy" is dangerous to all efforts to combat climate change. I imagine a similar line of thinking will underpin any future challenges against what appears to be an ambiguous policy.



Legal Digest

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