The UK government has defended its decision to invest $1.15bn in a massive gas scheme in Mozambique.
Responding to a legal challenge at the High Court, the government’s lawyer said:
“Revenue from this project is the only means of lifting millions out of poverty”.
The money for a liquified natural gas plant and offshore pipeline was approved by the Treasury and the government’s export credit agency, UK Export Finance (UKEF), in July 2020.
Six months later, the government announced it would stop public investments in overseas fossil fuel projects.
Friends of the Earth is seeking a judicial review of the Mozambique finance.
It argued yesterday that ministers approved the project believing it would reduce greenhouse gas emissions and was compatible with the Paris climate agreement. But this conclusion was based on a flawed assessment of the climate impacts, the organisation said, and without any reference to global carbon budgets.
Sir James Eadie QC, for the international trade secretary and president for the board of trade, said funding for the LNG project was the only source of foreign money that would enable Mozambique to “put in place the basics to harness its huge capacity for renewables” and defend against the effects of climate change. He said:
“In the real world, in order to lift millions of out of poverty and develop infrastructure that is necessary for the electricity grid, very significant quantities of foreign investment are needed.”
He said the project, headed by Total, would go ahead even if UKEF withdrew its funding:
“The true consequence of the UK not financing the project would be that there would be no effect on the emissions, UK business would not be supported in the way it could be and the potential would be lost to influence Mozambique and assist Mozambique in the future.”
Sir James told the court UKEF had considered the climate impacts of the project and had weighed the “obvious and inevitable” emissions against other considerations.
Friends of the Earth had argued that the UK government could not use public finance in a way that undermined the goals of the Paris Agreement. Its barrister, Jessica Simor QC, said the LNG project had a “high risk” of locking Mozambique into fossil fuels and creating stranded assets.
But Sir James said the Paris Agreement did not preclude developed countries from providing finance to countries like Mozambique.
It recognised that developing countries may have longer transition periods to low carbon economies and their emissions levels may take longer to fall.
The Paris Agreement was a “high level aspirational declaration”, he said, that had not been incorporated into UK domestic law and did not contain “clear and specific obligations”.
The case continues tomorrow when the government will complete its arguments. Judgement is expected to be reserved
- At a separate court hearing, three campaigners argued that the Oil & Gas Authority’s strategy to “secure the maximum value of economic recoverably petroleum” from the North Sea was in conflict with its other responsibility to help the UK to meet its target of net zero emissions by 2050. They said the OGA failed to take into account public subsidies and decommissioning refunds paid to oil and gas companies when assessing economic recovery. This meant that hydrocarbon extraction was not economic for the UK, they said, and encouraged the extraction of more oil and gas, causing additional greenhouse gas emissions. Judgement was reserved.