OPINION: Oil and gas industry opponents are increasingly turning to the law to prevent further investment in the fossil fuels sector, with judgements handed down in high-profile cases underscoring the geopolitical complexity of the energy transition.
A case in point was last week’s ruling by a London court that found against Friends of the Earth (FoE) — which will appeal the judgement — that wants to stop the UK government providing $1.15 billion of finance to TotalEnergies’ $20 billion Mozambique LNG project.
FoE’s fundamental argument in court was that UK taxpayers should not finance any overseas hydrocarbon projects that will generate carbon dioxide, including Scope 3 emissions.
The case was heard by two judges: Jeremy Stuart-Smith who found for the UK government, and Justine Thornton — the wife of Ed Milliband, former leader of the UK’s Labour party — who largely sided with the campaign group.
A detailed reading of the ruling highlighted the case’s complexity, including interpretations of the Paris Agreement, whether Scope 3 emissions could be calculated accurately, and non-climate related factors which influenced the government’s decision to lend to Mozambique LNG last year.
If FoE’s appeal for a judicial review succeeds, it is unclear if this would prevent the UK funding future overseas fossil fuel schemes, or if finance could still be provided because the government would prioritise geopolitical and economic issues over climate.
As Stuart-Smith said in his ruling, if export credit agencies (ECAs) cannot fund fossil fuel projects this will cause “the classic injustice that developed countries have had the advantage of developing their fossil fuels, but seek to prevent their under-developed neighbours from securing the same advantage, condemning developing countries to continuing poverty”.
The opposite view is held by Emily Benson, associate fellow at the US-based Center for Strategic & International Studies, who wrote recently that “simply because the west has made climate-poor decisions for 200 years, does not mean any country should continue to make those same bad decisions”.
She was responding to an earlier article written by Todd Moss, a former deputy assistant secretary in the US Bureau of African Affairs, and Vijaya Ramachandran, director at the Breakthrough Institute in California.
They accused the West of “green colonialism” and “climate redlining,” stressing how western nations allow continued investment in their domestic hydrocarbons while refusing to finance poorer countries’ projects that aim to use indigenous gas resources locally.
If Western ECAs are increasingly unable to fund fossil fuel projects, how can industrialising countries — in Africa, for example — develop indigenous oil and gas resources, particularly for domestic use?
The main alternative would appear to be Asian lenders, with the result that the West’s influence could lessen on the fast-growing continent — a major source of the metals and rare earths needed for the transition.
However, there are nascent signs African nations are working on a plan to self-fund fossil fuel schemes, with suggestions that state-owned Nigerian National Petroleum Corporation and Cairo-based Afreximbank are eyeing the creation of an African energy bank.
This ‘bank’ would likely focus on supporting projects to tap gas as a transition fuel, but surely it should also be able to fund the development of a renewables industry.
After all, despite extremes of public opinion, most African nations — just like Norway — acknowledge the transition and pursue a dual strategy of both fossil fuel and renewable developments.
As the Ukraine war has shown, the more self-reliant a country is for energy supplies, the better it copes with external shocks.
(This is an Upstream opinion article.)
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