The UK government could face a legal battle after offering more than $1bn in financial support to help build a gas project in Mozambique despite its commitment to tackling the climate crisis.
Under the deal, UK funds will be used to help develop and export Mozambique’s gas reserves, in one of the largest single financing packages ever offered by a UK credit agency to a foreign fossil fuel project.
The government’s foreign credit agency, UK Export Finance (UKEF), will offer loans worth $300m to British companies working on the gas project, and will also guarantee loans from commercial banks worth up to $850m.
The decision taken by UKEF, which has been accused of “rank hypocrisy” over its record on fossil fuel financing, has emerged just over a year after MPs on the environmental audit committee called for an end to government support for polluting projects overseas, saying it “undermines the UK’s climate commitments”.
Mozambique LNG is classed as a category-A project under OECD guidelines, which means it risks significant adverse environmental or social impacts that are irreversible or unprecedented, and requires prospective backers to undertake an impact assessment review.
Friends of the Earth have accused the government of failing to take into account the project’s impact on efforts to tackle the climate crisis, and warned that they may call for a judicial review of the decision.
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