British aid money is being used to fund fossil fuel projects in Africa and south east Asia, despite the UK government urging every country in the world to formalise plans to hit net zero greenhouse gas emissions.
An investigation by Greenpeace reveals the government’s development finance institution – CDC Group – which invests money in businesses in developing countries, has 16 active investments in oil and gas projects in Africa, and one in south east Asia.
Over $785m (£623m) has been invested by the organisation into 14 different intermediary investment funds which then pumped some of this money into oil and gas companies – CDC did not provide a full breakdown of how much money went to each company.
But news of the investments in polluting fossil fuel firms comes as the government gears up to host the UN climate conference in spring 2021.
In February, at the formal launch of UK plans to host the COP26 climate, before it was delayed due to the coronavirus pandemic, Boris Johnson said: “We have to deal with out CO2 emissions and that is why the UK is calling for us to get to net zero as soon as possible – for every country to announce credible targets to get there.”
Rebecca Newsom, head of politics at Greenpeace UK, said: “The fact that UK aid money is helping wealthy Western companies to lock the developing world into oil and gas really beggars belief.
“These are often nations that are already on the frontlines of the climate emergency but have done the least to cause it.
“The government must put an immediate moratorium on all new fossil fuel investments overseas and phase out all existing investments by 2021, so the UK can genuinely lead by example as hosts of COP26.”
She added: “Rather than using millions of aid money to make the climate emergency worse, ministers should support a just transition away from fossil fuels and towards renewables that can supply affordable and reliable electricity to millions of people with no access to it.”
CDC was originally formed by the Labour government after the Second World War to assist British colonies in the development of agriculture, and its initials first stood for the Colonial Development Corporation. It was renamed the Commonwealth Development Corporation in 1963 and is now wholly owned by the Department for International Development. Since 2011 it has focused on the emerging markets of South Asia and Africa.
CDC’s investments in fossil fuels date back as far back as 2007, with the most recent investment, being in a company specialising in oil and gas services and transportation, including things like petrol stations in Uganda, which was made in March 2018.
The investigation also revealed where the intermediary investment funds the CDC has used to funnel money into these fossil fuel projects have their headquarters.
Greenpeace said of the 14 investment funds used for this purpose, 13 are domiciled in tax havens, including Luxembourg, Mauritius and the Cayman Islands. The one non-tax haven based investment fund is headquartered in London.
The investments CDC has made with UK aid money include supporting Texas-based Kosmos Energy, an oil exploration and production company which specialises in deepwater drilling. Its website says its “key assets” include offshore oil production in Ghana, Equatorial Guinea, and the US Gulf of Mexico, as well as offshore gas developments in Mauritania and Senegal.
CDC’s investment in Kosmos was in 2014.
It has also channelled funds into in two companies operating in Nigeria: Vertex Energy, a Texas-based company which refines oil to be used by the petrochemical industry, and Lagos-based firm Broron oil and gas which has an office in Houston.
Money is also invested in Africa Oil Corp, a firm based in British Columbia, Canada, which has oil licenses across Africa. CDC’s investment supports the company’s work in South Africa and was first made in 2014.
CDC also has an active investment in Sphere Petroleum QSC, a Qatari company which focuses on oil and gas exploration in west and north Africa and the Middle East. CDC’s investment in Sphere was made in 2007.
CDC told Greenpeace fossil fuel investments make up a small portion of its portfolio and such investments were only made after meeting stringent requirements.
A spokesperson said CDC had increased its investment in renewable energy since 2016 from 5 per cent of new investments to 25%per cent during the 2017-18 period.
The organisation said during the same period fossil fuels investments accounted for 4 per cent of new investments.
The Independent has contacted CDC Group and the Department for International Development for comment.Source: Independent