Conservatives pledge to stop UK fossil-fuel subsidies

The government has provided almost three-quarters of a billion pounds in subsidies to fossil-fuel burning power stations over the past 13 years, according to figures highlighted today by the Conservatives.

Shadow secretary of state for international development, Andrew Mitchell, today promised to stop the subsidies, which are delivered through the Export Credit Guarantee Department (ECGD), arguing that the scale of support for carbon-intensive industries was " scandalous".

"We will bring to an end Labour's guarantees for "dirty" fossil-fuel power stations," said Mitchell in a speech to the Overseas Development Institute. " Today I can announce that under a Conservative government, ECGD will never again support investment in "dirty" fossil-fuel power stations."

The ECGD provides insurance and bank-loan guarantees to British firms exporting technologies and services overseas, and according to a recent National Audit Office report, the department has not rejected any applications for support on environmental grounds since 2000.

Mitchell said that instead of supporting fossil fuel technologies, the body should become a champion for British companies that develop and export clean technologies. "The potential here is huge," he said. "If we take action in the right way, we can help cut carbon emissions while boosting economic growth in developing countries."

Guarantees from the department should be used to catalyse private-sector investment, he added, enabling effective transfer of low-carbon technologies.

"There is real potential for using taxpayer guarantees to encourage British business to invest in the countries which need foreign direct investment the most, particularly during the current crisis which has seen global investment flows fall substantially," he argued.

Under the Conservative plans, a trade minister would be appointed to ensure that both the ECGD and UK Trade & Investment support clean technologies while limiting support for carbon-intensive technologies - a move the party hopes will set a precedent for other countries to follow.

A recent report from the International Energy Agency estimated that fossil-fuel subsidies worldwide, largely in non-OECD countries, amount to around $300bn (£180bn) per year. It calculated that simply axing subsidies could cut global carbon emissions 12 per cent by 2050.

Such subsidies are often cited as a means of protecting poorer sections of society from fuel poverty, but Mitchell argued there were more effective means of helping people to cope with rising fuel bills, adding that he wanted to see all G20 countries phase out fossil-fuel subsidies by 2020.

Shadow foreign secretary William Hague is expected to provide a more detailed outline of the Conservatives' plans to support clean technology development and transfer in developing countries in a speech to the Green Alliance think-tank on Wednesday.

A spokesman for the ECGD told BusinessGreen.com that the UK currently exported very little technology to power stations, but he admitted that when they did occur, applications for support were rarely refused.

"It is not government policy to refuse to support applications from aerospace, defence or the power generation industries," he said.

He was unable to provide further details on the scale of support provided, failing to confirm or deny the £750m figure cited by the Conservatives.