Vince Cable’s department has broken a key coalition deal on the environment for a second time, say campaigners.
UK Export Finance – also known as the Export Credits Guarantee Department (ECGD) - has announced it is backing up to $1bn of loans to Brazilian oil company Petrobras, which specialises in deep and ultra-deep water drilling.
The coalition agreement of May 2010 pledged that the ECGD would “become [the] champion for British companies that develop and export innovative green technologies around the world, instead of supporting investment in dirty fossil-fuel energy production”.
The new loans to Petrobras come hot on the heels of confirmation in October that the department is backing a $11.6 million loan for equipment in a Siberian coal mine.
Margaret Ounsley, Head of Public Affairs at WWF, commented: "It is really slightly gob-smacking that the Government can argue that financial support for a process that only last year was responsible for the worst accidental oil-spill in marine history in the Gulf of Mexico, is not "dirty".
"One can only wonder what they did have in mind when they made their commitment to end subsidies for "dirty fossil-fuel energy production" as clearly this does not cover coal, nor deep-water drilling. Did they have their fingers crossed behind their backs when they signed the agreement? It is intensely disappointing."
Madeleine Evans, Campaigns Officer at Jubilee Debt Campaign added: “Vince Cable’s ECGD may have re-branded itself, but this shady government department continues to support projects with little regard for whether they threaten the environment or human rights, or create illegitimate debt. We need proper public scrutiny of what projects this department is using public money to support.”
ECGD was criticised last year for its support of Petrobras when it agreed to back the construction of the P-52 Oil platform in 2005, one of the world “largest and riskiest” oil-drilling projects.
The consideration of the new billion-dollar loan to Petrobras coincides with William Hague's words to the CBI conference, when he said that it would be ‘fatal’ for the UK to dilute its commitment to the green agenda.
Deputy Prime Minister Nick Clegg travelled to Brazil in June this year. He met with the president of Petrobras, and called for UK exports to Brazil to double.
UK Export Finance is the new name for the Export Credits Guarantee Department (ECGD). It is the UK’s export credit agency and backs loans to countries and companies to buy British exports.
Traditionally, 75 per cent of the department’s support has been given to arms, aerospace and carbon-intensive industries. In the event of an loan backed by UK Export Finance not being repaid, UK Export Finance repays the loan instead.
For a loan to be backed by UK Export Finance, at least 25 per cent of the equipment needs to be manufactured in the UK.
WWF and the Jubilee Debt Campaign are members of Clean Up Britain's Exports (CUBE), which is challenging the lack of transparency at UK Export Finance, as well as its tendency to make loans to support fossil fuels and arms. Other members include, Christian Aid, Amnesty International and the Campaign Against Arms Trade (CAAT).