Activists try to block UK's $1bn financing of Mozambique gas plant

London court hears that the funding decision is incompatible with Britain's climate change commitments

Soldiers patrol the area near a Total complex in Cabo Delgado, in Mozambique. AFP

The UK government failed to properly assess the impact on climate change before offering more than $1 billion for a large-scale fossil fuel project in Mozambique, a court has heard.

Environmental group Friends of the Earth has brought a legal challenge against a June 2020 decision by the UK’s credit export agency to help fund the project in the north of the country.

The charity claims that the building project for the liquefied natural gas (LNG) plant alone will increase the greenhouse gas emissions of Mozambique by up to 10 per cent by 2022.

The UK grant for the $20 billion project being developed by Total E&P Mozambique is one of the largest ever offered by the Treasury-backed agency to an overseas fossil fuel project, the UK’s High Court was told.

Total is aiming to extract 43 million tonnes of liquid natural gas every year for 32 years from offshore gasfields through the plant in Cabo Delgado, according to lawyers for the group.

Mozambique is one of the world’s poorest countries but huge gas deposits were discovered in the early 2010s, sparking significant international interest. The group said the plant's annual green house gas output at full capacity would be equivalent to the emissions from the aviation sector of all EU member states combined.

The financing decision is “incompatible” with the UK’s climate change ambitions, according to the group, and will make it impossible for Mozambique to achieve its own commitments, its lawyers said.

The UK has enshrined its target of becoming “net zero” by 2030 into law, but faced protests over its overseas investments when it hosted the UN’s Cop26 climate change conference in Glasgow in November.

In written submissions, Jessica Simor, a lawyer for Friends of the Earth, highlighted the government's policy, adopted in March this year, to no longer provide new direct financial support for the fossil fuel energy sector overseas.

She said a climate change review carried out before the funding was made available reached conclusions “on the basis of fundamental errors” which “no reasonable decision-maker, properly directing himself, could reach, and rendered the decision unlawful".

Lawyers for the government argue that the claim should be dismissed, saying the financing, via guarantees and loans, was aligned with its Paris commitments to support developing countries as they respond to the challenges of climate change.

James Eadie QC, for the government, said the review concluded there would be a “significant impact” in terms of increased greenhouse gas emissions. But he said other public interest issues, such as the benefit to UK business and the “transformational economic benefits” to Mozambique were also considered.

The hearing is set to conclude this week with a judgment released at a later date.