As seen in the above graph, the majority of PIDG fossil fuel support – 64% - has gone to fossil gas. Proponents of gas claim that it is a cleaner fuel than some alternatives, and that it is a ‘bridge fuel’ towards a clean energy future. However, a growing body of research shows that switching from one polluting fuel to an apparently marginally less-polluting fuel will still break the world’s climate limits. Gas also locks developing countries into fossil fuel development, at a time when plummeting renewable energy prices mean that clean energy will disrupt the business model of gas plants, with renewables better placed to provide energy access.



Development groups such as the Catholic Agency for Overseas Development (CAFOD) have called for the UK to immediately stop any aid money being spent on fossil fuels, and have stated that renewable energy is the best way to provide energy access for the world’s poorest.

Funding new fossil fuel capacity in this way runs against the Paris Agreement commitments that each all of PIDG’s funding governments say they support. Article 2.1c of the Paris Agreement requires signatories to ‘(make) finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development’. Spending nearly $750 million on funding fossil fuel projects in some of the world’s most vulnerable countries flies in the face of this commitment.

Clean break?



In recent years, PIDG has scaled up its renewable energy support.

Although PIDG gave no support to fossil fuels in their ‘energy’ category in 2018, fossil fuel support resumed in 2019. In 2019, PIDG provided $23.8 million for a gas power plant in Togo, and $31 million for a gas plant expansion in Cote D'Ivoire.

These projects are not included in the 2002-18 PIDG total fossil fuel investment figure of $749 million, so these investments, even if they are not accompanied by any others, would push PIDG’s total fossil fuel support above $800 million. Because PIDG has not released its total list of 2019 investments at the time of writing, it is possible there are more fossil fuel investments in 2019 not accounted for here.

In addition, PIDG have provided significant funding for highly polluting investments outside the ‘energy’ category. Under their ‘industrial infrastructure’ category, PIDG provided support in 2015 worth $30 million to ByCo, ‘Pakistan’s leading petroleum company,’ for improvements to their flagship oil refinery.

PIDG has also invested $128.5 million into Helios Towers, a company that owns thousands of telecommunications towers across Africa. In much of sub-Saharan Africa, many of these towers run on diesel power. In rural areas poorly connected to electricity grids, the diesel generators are the primary source of power. In Tanzania, only 80 out of 3,000 towers owned by Helios Towers are electrified. In this way, PIDG are investing in thousands of small diesel power plants. According to the International Finance Corporation - who are themselves investors in PIDG - small diesel generators in developing countries are ‘a significant source of air pollution’ and ‘contribute to…climate-damaging pollution.’ It is hard to argue that investing in thousands of diesel-powered telecommunications towers is not a fossil fuel investment, even though it comes under the ‘telecom’ section of PIDG’s portfolio.

These are only two examples in a large portfolio of investments that suggests that PIDG’s total portfolio has a large climate impact beyond investments it classes under ‘energy.’

Not all of PIDG’s renewable energy support is necessarily clean or unproblematic either. A significant proportion - 43% - of their total renewable energy spending from 2002-18 has gone to biomass and hydropower, sources of energy that are not always clean. Hydropower has come in for significant criticism for destroying habitats, and studies show that rotting vegetation in dams emits significant sources of methane, a powerful greenhouse gas. The total methane emissions from the world’s dams equals 1.3% of the world’s total annual greenhouse gases – bigger than many countries. There is a risk that some of PIDG’s hydro projects contribute to this.

Biomass – burning trees and other biological material for energy - is increasingly recognised as dirty and polluting. Scientific studies have shown that not only does biomass burning increase carbon emissions and air pollution (often more than coal), it is also damaging the ability of the world to cope with climate change. This is because biomass burning often involves cutting down greenhouse gas-absorbing forests to make room for biofuel crops, or to burn thetrees themselves. The increased demand for wood that biomass power plants bring can lead to other problems, such as threats to food security and increased risk of land use conflicts.[xviii]



Therefore, not only is PIDG continuing to invest in fossil fuel power and high-carbon industrial infrastructure, but also a notable amount of their renewable energy spending goes to energy sources that may not be clean.

What do PIDG say?



When approached for comment by Global Witness, PIDG said that it had committed to ‘support the countries in which we operate to transition to climate resilient and low carbon infrastructure in line with Paris Agreement commitments.’ However, as we have outlined above, it is difficult to see how supporting further fossil fuel projects is in any way in line with Paris Agreement commitments.

PIDG claims that it prioritises low-carbon biomass and prefers zero-hydro projects. When considering more polluting hydro projects, PIDG says they perform emissions estimates and compare them to alternatives.

On the subject of high-carbon investments outside the energy sector, PIDG said they are now extending their climate change policy to ‘cover all the sectors in which we invest.’ They stated they are actively looking at opportunities for hybrid and renewable energy-powered telecom towers, in place of diesel-powered telecom towers.

PIDG said that its future strategy committed it to renewable energy, but claimed that fossil fuel investments were necessary ‘in the poorest and most fragile states as a transitional source of power.’ PIDG says that its fossil fuel projects do not displace cleaner alternatives and that there is a net positive impact for the environment from them. PIDG also told Global Witness that from 2019 onwards, it won’t support further heavy fuel oil plants. However, prominent international development organisations disagree with the claim that fossil fuel investments are necessary to alleviate poverty. The claim that PIDG fossil fuel projects do not displace renewable energy is hard to substantiate.

Recommendations

The Prime Minister and the Secretary of State for International Development must use the UK Government’s leading position in PIDG to adopt a fossil fuel-free policy in time for the UN Climate talks in Glasgow in November 2020.

The Government must compel PIDG to adopt effective climate policies that will prohibit support to high-carbon infrastructure outside of PIDG’s ‘energy’ category, such as oil refining and petrochemicals.

There must be an immediate end to Overseas Development Assistance (ODA) and non-ODA fossil fuel support overseas, across all Government departments. UK support overseas should be spent on clean energy, avoiding carbon lock-in in developing countries. The Government must implement the Parliamentary Environmental Audit Committee’s recommendation that UK Export Finance (UKEF) should end all support for fossil fuels. UKEF currently gives 97% of its energy support to fossil fuels.

There should also be a matching moratorium and disinvestment policy for all development finance institutions in receipt of UK aid funding – such as the World Bank Group, African Development Bank (AfDB), European Bank for Reconstruction & Development (EBRD). All future UK ODA contributions should be contingent on policy change.

Conclusion

PIDG is just one of a patchwork of organisations and agencies funded by the UK Government that has had its huge support for fossil fuels revealed in recent times:

Research by CAFOD and the Overseas Development Institute shows that the UK spent £4.6 billion on fossil fuel energy projects overseas from 2010-17, with support spread across a range of departments.

UK Export Finance (UKEF), a Government agency tasked with assisting UK business abroad, gave 97% of their energy support from 2010-17 to fossil fuel projects. A study of their latest annual report suggested they provided a full £2 billion in support to fossil fuels in 2017/18 alone.

The cross-departmental Prosperity Fund, used aid money to finance two projects in China to ‘promote UK expertise in hydraulic fracturing’ (fracking). The fund spent money from the Overseas Development Assistance budget on 16 oil and gas extraction projects globally, for a total of £2 million between 2016 and 2018.

To these colossal numbers, we can add PIDG’s $750 million support for fossil fuels. It is likely that the Government funds overseas fossil fuels via further as-yet-uncovered mechanisms too.

This contributes to a farcical situation where the Government, on one hand, spends aid money to mitigate climate change and help vulnerable countries, and on the other hand finances fossil fuels all over the world, making the problem worse for the world’s poorest. The situation is so severe that a committee of MPs warned

that this inconsistency threatens to ‘nullify the effectiveness of wider aid spending.'

Fossil fuels hinder, rather than help, development. With the rapid development of off-grid renewable energy, there is no longer any justification for supporting fossil fuel power generation with aid.

If the UK is to be a climate leader, this support for fossil fuels needs to end immediately.