The credit export wing of the UK Government could support tens of thousands of jobs in the coming years if it switches its focus from oil and gas to renewables, according to a new study.
Research carried out by Vivid Economics, on behalf of the European Climate Foundation, shows that UK Export Finance (UKEF) would create more jobs by supporting clean energy owing to it being a more labour intensive industry.
The study claims that, if the ministerial department assumed liabilities for renewables exports to the same scale it currently does for oil and gas, it could support 42,000 jobs in the sector annually by 2035, up from 2,000 today.
It also argues that renewable energy companies are more in need of support because they typically have smaller balance sheets and engage in more capital-intensive projects, as a percentage of total costs.
UKEF is responsible for helping domestic companies access export finance, as well as issuing overseas loans to organisations buying UK goods and services.
The department came under fire earlier this year after it emerged it pledged $300 million (£230m) to a Total-led LNG project in Mozambique, prompting Boris Johnson to order a review of government guarantees for oil and gas projects.
According to the report, entitled UK Export Finance and domestic jobs, UK Government support plays a “minor role” in securing oil and gas jobs in the UK and reallocating funding is unlikely to have a “meaningful negative impact” on employment.
It claims UKEF currently helps support around 8,000 jobs in the industry, which employs a total of approximately 150,000 directly or indirectly.
Nathan Bennet, RenewableUK’s public affairs manager, said: “This report further demonstrates that the Prime Minister’s vision of transforming the UK into ‘the Saudi Arabia of wind’ should focus on exports abroad as well as on ramping up deployment at home.
“We know there is a significant opportunity for the UK to export offshore wind engineering expertise, components and services to the large European offshore wind market and the rapidly expanding global market, including China and the USA, which is expected to be worth £30bn a year overall by 2030.
“UKEF is helping renewable energy companies to access loans, insurance policies and bank guarantees which enable international trade, as the agency shifts from a historical role to supporting oil and gas to renewables.
“We were pleased to see the Chancellor give UKEF an additional £2bn in March to finance clean energy projects abroad. However, Government also need to also increase funding for the Department for International trade, so they are better resourced to support UK companies in entering global markets.”
Gregor McAbery, co-ordinator of Aberdeen Friends of the Earth, said: “Now is definitely not the time to invest in fossil fuel extraction, we must instead ensure that all the public money and economic help necessary is fed into the transition to renewables and related energy storage technology.
“This report is further reminder that we need to ensure a healthy transition period that ensures we grow the kind of jobs in renewable tech that will be attractive to those currently working in oil and gas.
“We need a rapid transition both to tackle climate change and to boost our local and National economy.
“Every month we continue to prop up the fossil fuel industry is time wasted.”
Emma Pinchbeck, Energy UK’s chief executive, said: “The continuing expansion of renewables and other low carbon technologies is obviously essential to reach our climate change targets but also offers the widest economic benefits through the creation of jobs and investment in growing and sustainable specialities.
“If the UK can build on the world leading role it already has in some low carbon technologies then our businesses can reap the reward from exporting to other countries to help them meet their climate ambitions”.
Laurie van der Burg, senior campaigner at Oil Change International, said: “By investing in renewables and ensuring just transition support for oil and gas workers the UK can create reliable jobs that are critical to build back better from COVID-19.
“This report shows that the UK has a clear opportunity to show climate leadership and stop propping up deadly fossil fuels with public money. To ensure others follow suit, it should do so ahead of Finance in Common, the first global development bank Summit taking place next month.”
Alexander Stafford, Conservative MP for Rother Valley and member of the Business, Energy and Industrial Strategy Committee, said: “This report provides further confirmation that renewable energy is a huge employment opportunity for the UK, particularly for communities like mine in South Yorkshire.
“The government should act as soon as possible to switch U.K. export finance away from fossil fuels to renewables, to ensure we are well positioned to capture the export opportunities in this booming sector and to support small and medium sized companies in the renewables supply chain.”
A UKEF spokesperson said: “Supporting the UK’s renewables sector is of utmost priority for the whole of the UK government. UKEF is already contributing to this effort by providing financial support to UK businesses at the heart of the global transition to renewable energy.
“UKEF’s capacity to support jobs in the renewables sector is set to grow as the renewables supply chain strengthens in the UK.”
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