Thursday 9 November 2006

In the same week that the world's governments meet in Nairobi to discuss how to combat climate change, and only a week after David Miliband MP, the Secretary of State for DEFRA, announced far-reaching climate change legislation in the House of Commons, new research published today, uncovers the real damage being done by Government policies.

The report reveals the paradox of the UK Government taking an international lead role in the climate change debate, yet providing over £2 billion in financial support last year, primarily to support the supply of aircraft and hydrocarbon extraction. The research calls on the Government to amend the remit of the ECGD and require it to phase out its support for carbon intensive sectors.

The research reveals that in addition to supporting projects to enhance UK profits with little regard for the impact of climate change on the poor, the ECGD currently has no clear recognition of its impacts on climate change or a strategy for reducing them.

The briefing, Flying Low, the UK Export Credit Guarantee Department and Climate Change, reveals that over the last five years, the ECGD has provided £3.3 billion in support for the supply of 294 aircraft - the equivalent of British Airway's entire fleet. The Department has also stated that the current high oil price and profits means that there is even greater opportunity to subsidise the sector.

Robert Napier, WWF-UK Chief Executive, said: "The ECGD is not taking into account the social cost of its activities which would reveal its negative contribution to society. The Stern Review recently put an $85 price tag on the damage caused by each tonne of carbon dioxide. Using this figure, the lifetime emissions from the 86 aircraft financed by the ECGD in 2005 is £3.8 billion; nearly four times the cover that they provided to the aviation sector."

At the same time as the ECGD is considering whether to support Shell's Sakhalin II project in Russia, they are failing to recognise the damage caused by their interests, for example the impact on the critically endangered Western Gray Whales that could be driven towards extinction by the project.

James Leaton, WWF oil policy officer, said: "It is clear that the ECGD is in direct contradiction of the UK Government position on climate change agreed across other departments, which have recognised the impacts of climate change on the environment and poverty alleviation. The ECGD needs to send a signal to the market that it is looking to reduce emissions, rather than support them."

"With the Treasury's Stern review setting out the imperative to create a flow of investment to low carbon futures and concluding that 'climate change is the greatest market failure ever seen' there is no better time to take a reality check on ECGD financing. The time has come for fundamental changes to public sector support for carbon intensive activities."

The report recommends a number of ways the ECGD could improve:

• Alistair Darling MP- the Secretary of State for the ECGD - and the Government need to urgently review the mandate of the ECGD with regard to climate change;
• both DEFRA and DFID must take a strong position on the reform of the ECGD to ensure that it is fully in line with Government policy;
• the ECGD needs to take urgent action to rectify the inability to consider climate change issues; and
• the ECGD should report clearly and publicly on the emissions it provides financial support for and the indirect emissions from the infrastructure and equipment it supports.

If the ECGD continues to support carbon intensive investments such as Sakhalin II, it will be consciously breaching its requirement to be in accord with UK Government objectives. The ECGD is currently an embarrassment to the UK because of its poor record on climate change, and must not be allowed to fly low beneath the radar of policies to reduce carbon emissions.