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The consultancy giving cowl to fossil gas tasks



Wooden Mackenzie analysis was used to justify UK assist for a gasoline megaproject in Mozambique and a brand new coal mine, in authorities and in courtroom

The UK likes to current itself as a worldwide local weather chief. As host of the 2021 UN local weather summit, it despatched diplomats around the globe to steer different governments to curb emissions.

Again dwelling, the federal government made two selections that undermined its ethical authority within the battle towards local weather change. It accepted British taxpayer assist for an enormous gasoline mission in Mozambique and gave planning permission for a brand new English coal mine.

Local weather Dwelling examined paperwork revealed by courtroom proceedings and campaigners’ freedom of knowledge requests and located a standard denominator. In each selections, politicians and civil servants relied on analysis from an organization referred to as Wooden Mackenzie to justify their selections.

Wooden Mackenzie’s recommendation then persuaded judges that the UK authorities acted lawfully in supporting the Mozambique gasoline mission.

The courts have but to rule on the UK’s assist for the brand new coal mine however Wooden Mackenzie’s recommendation might once more be pivotal – and contested. Local weather and vitality consultants – together with some working for the UK authorities – have criticised the consultancy’s analysis as “simplistic” and missing credibility.

In its recommendation to UK Export Finance on the Mozambique mission, Wooden Mackenzie assumed the world was on target for a catastrophic 3C of worldwide warming. The consultancy described a 2C restrict, the minimal objective of the worldwide Paris Settlement, as “highly ambitious” and unlikely to be met, subsequently justifying extra gasoline drilling.

It claimed the gasoline produced would scale back international emissions by displacing coal and oil, but fudged the size of air pollution related to clients burning the gasoline – generally known as scope 3 emissions.

The Worldwide Vitality Company has since discovered that no new fossil gas tasks are suitable with limiting international warming to 1.5C, a safer threshold.

Who’re WoodMac?

Wooden Mackenzie began out in 1923 as a stockbroking agency within the Scottish capital Edinburgh.

Within the Sixties, fossil gas corporations struck oil off Scotland’s east coast the North Sea and the corporate, affectionately generally known as WoodMac, noticed a chance. It began offering information, analysis and recommendation to the fossil gas business.

It now has places of work in fossil gas hubs the world over – from Texas, to Abu Dhabi, to Kazakhstan. Its web site options buyer testimonials from Chevron, Murphy Oil and Domo Chemical substances.

New coal mine

Final month, the UK authorities sparked international fury by approving planning permission for a brand new coal mine within the north of England.

Because the prime minister of Fiji, Frank Bainimarama identified, the UK fought exhausting to get anti-coal language into the textual content of the Glasgow settlement in 2021.

“Fossil fuels should be phased OUT – not up,” he tweeted.

The chair of the federal government’s official local weather advisory physique, Lord Deben mentioned the choice “sends entirely the wrong signal to other countries about the UK’s climate priorities”.

Michael Gove, as minister for native authorities, was answerable for the choice. He primarily based it on a 360-page report from city planner – and former coal miner – Stephen Normington.

In his report, Normington argued that Wooden Mackenzie’s analysis was extra helpful than that of sources just like the Worldwide Vitality Company (IEA) or the Local weather Change Committee (CCC). The IEA is funded by its 31 member governments whereas the CCC is the UK authorities’s official local weather change advisory physique.

Campaigners arguing towards the coal mine mentioned no new mines for metal-making coal have been wanted. Wooden Mackenzie projected that Europe would stay a big marketplace for coking coal for a number of many years.

Pals of the Earth argued that Wooden Mackenzie’s forecasts weren’t in line with conserving international warming beneath 2C above pre-industrial ranges, not to mention 1.5C.

Normington discovered Wooden Mackenzie’s evaluation a “more realistic and currently foreseeable approach” because the UK’s local weather targets have been “incredibly challenging”.

Pals of the Earth are actually difficult the choice in courtroom. However Normington’s recommendation to Gove, which was knowledgeable by Wooden Mackenzie’s analysis, is more likely to rely towards campaigners in courtroom.

Mozambique’s carbon bomb

Wooden Mackenzie’s recommendation was equally key in getting the UK authorities to financially assist gasoline drilling plans by French oil main Complete.

Complete plans to extract gasoline from the seabed off the coast of northern Mozambique, carry it to shore, flip it into liquid and ship it around the globe.

The mission has been criticised by environmentalists, involved concerning the emissions launched from producing and burning the gasoline.

Pals of the Earth campaigners collect outdoors London’s Royal Courts of Justice in March 2022 (Pic: Pals of the Earth)

Native civil society and safety analysts declare that the invention of gasoline has worsened armed battle within the area, by elevating native peoples’ expectations for jobs and infrastructure after which failing to satisfy them, inflicting anger.

Anabela Lemos is the director of Pals of the Earth Mozambique. She informed Local weather Dwelling that fishing communities had been relocated away from the ocean. “All their way of life was completely destroyed,” she mentioned.

She added that gasoline manufacturing might harm the crops and animals of the Qurimbas islands, a Unesco biosphere reserve. “Exploration on the sea is going to destroy everything,” she mentioned.

The UK’s export credit score company, generally known as UK Export Finance (UKEF) provided to assist the mission with as much as $1.15 billion. That’s $0.3bn in loans to British corporations engaged on the mission and $0.85bn value of ensures on loans from industrial banks. This is able to create an estimated 2,000 jobs for British staff.

Export credit score businesses from the USA, Japan, Netherlands, South Africa, Italy and Thailand backed the mission too, as did the African Growth Financial institution.

How WoodMac obtained concerned

When UKEF got interested within the mission in 2019, it instantly ranked the mission as “category A”, that means it has the “potential to have adverse environmental and/or social impacts”.

In January 2020, the group of export credit score businesses determined they wanted to evaluate the greenhouse gasoline emissions of burning the gasoline which Complete wished to pump up. These are generally known as scope three emissions.

Based on the excessive courtroom judgment on the case, Complete was concerned in deciding who ought to make this evaluation. The contract went to Wooden Mackenzie.

They have been already performing as “gas marketing consultants” for the mission’s monetary backers and had suggested the African Growth Financial institution on local weather change concerns.

‘Considerably simplistic’

Wooden Mackenzie took a couple of month to supply a 23-page draft report. A disclaimer within the final slide of the report says “we do not guarantee fairness, completeness or accuracy”.

Privately, UKEF officers have been scathing concerning the agency’s efforts. In emails revealed in courtroom, one UKEF worker described it as “very light”. One other mentioned it operated on a “somewhat simplistic level”.

A fisherman in Milamba earlier than Complete’s mission (Pals of the Earth Mozambique)

Particularly, Wooden Mackenzie refused to do what they have been initially requested to do – calculate the emissions from burning the mission’s gasoline.

They mentioned it wasn’t attainable to know the place the gasoline would find yourself and what it could be used for – so the scope of their work was restricted by settlement with UKEF.

Ben Caldecott is an skilled in sustainable finance and member of the Export Ensures Advisory Council, which advises UKEF. In Could 2020, he informed UKEF that Wooden Mackenzie’s failure to calculate emissions was “a big gap in the analysis”.

Julian Critchlow was the top of vitality transformation on the UK’s vitality ministry. He mentioned the failure “undermined the credibility of the assessment”.

Estimates are attainable

There’s a technique to calculate scope three emissions generally known as the greenhouse gasoline protocol.

This was developed by the World Assets Institute and the World Enterprise Council for Sustainable Growth.

Many of the corporations which report their scope three emissions use this technique and Complete’s skilled described it in courtroom as “well known and established”.

The UK parliament’s environmental audit committee had beneficial that UKEF use this technique.

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UKEF informed Local weather Dwelling that “the [greenhouse gas] protocol recognises the significant challenges in accounting for Scope 3 emissions which is an optional reporting category” they usually had used “expert external consultants”.

A spokesperson for Wooden Mackenzie mentioned that their contract prevents them from discussing why they did not use the greenhouse gasoline protocol technique.

The UK’s vitality ministry ultimately got here up with a determine for scope three emissions – however solely after prime minister Boris Johnson had accepted assist for the mission.

Officers estimated that producing the gasoline over the mission’s lifteimee would emit 322 million tonnes of carbon dioxide and burning it could emit an extra 806Mt. Collectively, that is roughly equal to a 12 months’s value of emissions from Japan.

‘Transition gas’

Whereas claiming not to have the ability to calculate the emissions of burning the gasoline, Wooden Mackenzie did really feel capable of conclude that Mozambique’s gasoline would displace extra polluting fossil fuels like coal and would subsequently assist in the struggle in local weather change.

This controversial conclusion was highlighted on the primary web page of their report which mentioned merely: “Gas and LNG are fundamental to the energy transition.”

The report later claims “oil and, in particular gas, are fundamental to enabling the energy transition without massive disruption”.

Wooden Mackenzie predicted that Mozambique’s gasoline can be good for the local weather as a result of “there appears to be particular scope for [the gas] to displace coal in power generation in China, India and Indonesia”.

Of the 15 slides, three are on how gasoline is much less carbon-intensive than coal or oil. None of those slides evaluate gasoline to zero-carbon vitality sources like renewables or nuclear.

Wooden Mackenzie’s report in contrast gasoline to coal and oil however not renewables or nuclear

That is nonetheless broadly Wooden Mackenzie’s view. A spokesperson informed Local weather Dwelling that gasoline would displace coal, notably in Asia. Paired with carbon seize, gasoline will present versatile electrical energy and hydrogen, they added.

Even in 2019, this clashed with recommendation from the IEA. In 2019, the organisation warned that whereas “gas can bring environmental benefits,” that “new gas infrastructure can lock in… emissions for the future”.

The IEA’s place has since hardened. It discovered in 2021 that no new gasoline tasks are suitable with 1.5C of worldwide warming and “net zero means huge declines in the use of coal, oil and gas”.

In 2021, the IEA mentioned that gasoline manufacturing should fall drastically if the world is restrict international warming to 1.5C (Pic: IEA)

1.5 not modelled

On the time of its report, Wooden Mackenzie assumed that international warming would attain 3C. It described its state of affairs limiting international warming to 2.5C as an “accelerated energy transition”.

The report additionally references the Worldwide Vitality Company’s 2019 sustainable growth state of affairs, which fashions how the world can restrict international warming to 2C.

Wooden Mackenzie describe this 2C state of affairs as “highly ambitious”. In its conclusions, it claims that limiting international warming to 2C can be “challenging, meaning that there is likely upside for [liquified natural gas]”.

Wooden Mackenzie didn’t refer in any respect to the 1.5C goal, which all governments agreed to “pursu[e] efforts” in the direction of in 2015’s Paris Settlement.

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This framing of temperature targets clashes with UK prime minister Boris Johnson’s speech at Cop26 in Glasgow on the finish of 2021.

He informed the summit that 2C “jeopardise[s] the food supply for hundreds of millions of people as crops wither, locusts swarm”.

Uppping that focus on to 3 levels “add[s] more wildfires and cyclones – twice as many of them, five times as many droughts and 36 times as many heatwaves”.

The world is at present at 1.2C of worldwide warming and is already struggling extra and worse local weather disasters.

Requested if it nonetheless regards 2C as “highly ambitious”, a Wooden Mackenzie spokesperson mentioned it “continues to be challenging but this challenge can be overcome”.

The corporate produced its first 1.5C state of affairs in February 2021. It claims that demand for gasoline can “be resilient” beneath this state of affairs if carbon seize and storage expertise takes off.

Light-weight however influential

Whereas it was scorned by consultants, the Wooden Mackenzie report performed a key position in persuading UKEF and the UK authorities to again the mission.

Later, the report proved crucial in British judges’ determination that the UK authorities acted lawfully in approving the assist – as they’d obtained skilled recommendation encouraging them to take action.

A key UKEF committee signed off on the assist at a gathering on April 30 2020.

The assembly’s minutes refer to Wooden Mackenzie’s assist and echo its findings that the gasoline would assist some Asian nations “transition to a lower carbon economy”.

This committee then suggested the UKEF’s then head, an ex-banker referred to as Louis Taylor.

On 1 June, Taylor requested then worldwide commerce secretary Liz Truss to assist the mission.

He suggested her to learn UKEF’s local weather change report on the mission, which was largely primarily based on Wooden Mackenzie’s report.

Ten days later, Truss signed off on it. Two days later, then finance minister now prime minister Rishi Sunak did the identical.

Now UK prime minister Rishi Sunak holds up a symbolically inexperienced briefcase at Cop26 (Photograph credit score: Treasury)

However the international minister Dominic Raab, worldwide growth minister Anne-Marie Trevelyan and the enterprise and vitality minister Alok Sharma opposed the mission on local weather grounds.

Sharma, who was additionally Cop26 president-elect, mentioned in an electronic mail that “it does not seem credible to support this proposal” given the UK’s internet hosting of the summit and it is new coverage of not funding coal tasks overseas.

Right down to Johnson

With ministers divided, Taylor went to prime minister Boris Johnson for a verdict.

Boris Johnson at Cop26, six months after he accepted assist for Complete’s gasoline mission (UNFCCC/Kiara Price)

By that stage of his management, the federal government’s scientists and his environmentalist girlfriend had transformed Johnson from a local weather sceptic to an avowed environmentalist. So his assist  for the gasoline deal was not sure.

Taylor informed Johnson what Wooden Mackenzie had informed his advisors. He claimed gasoline “is generally recognised as a transition fuel” and that it was not attainable to precisely assess the emissions from burning the gasoline.

Six days later, Johnson signed off on the mission. He requested solely that the federal government look into how a carbon seize and storage facility might be created to offset the mission’s emissions.

Six months later, Johnson informed a local weather summit that the UK would finish assist for fossil fuels.

At Cop26, two extra of the mission’s backers – the US and Italy – did the identical. Just a few months later, Japan joined them.

However the Mozambique gasoline mission snuck in beneath the road. It has not been affected by the brand new bans.

Authorized cowl

UK taxpayer assist was nonetheless not assured. In December 2021, campaigners from Pals of the Earth took the UK authorities to courtroom, arguing that the choice was not suitable with the Paris settlement.

They first made their case to 2 British excessive courtroom judges who got here to totally different conclusions.

Justice Justine Thornton discovered “the failure to quantify Scope 3 emissions, as well as other flaws in the climate assessment, mean that there is no rational basis on which to demonstrate that the funding for the Project is consistent with Article 2(1)(c) of the Paris Agreement”.

This text says governments should make “finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development”.

However choose Jeremy Stuart-Smith disagreed. So the case was kicked as much as a better courtroom.

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There, two appeals judges put lots of weight on Wooden Mackenzie’s evaluation.

Their ruling says there was “uncertainty” about whether or not the mission would scale back or enhance emissions and “the reports and materials obtained by the respondents made clear that the precise outcome could not be predicted”. Subsequently they thought-about the federal government’s determination that the mission was suitable with the Paris settlement was “tenable”.

As British judges are unelected, they’re cautious of overturning selections made by elected politicians until they clearly break the regulation.

What occurs subsequent?

Pals of the Earth legal professionals are mulling over whether or not to take the case to the supreme courtroom. If the UK does again the mission, it’s more likely to be the final international fossil gas mission it helps.

Lemos remains to be hopeful. She mentioned: “We believe there is a chance for an appeal and there’s a chance for us to win… I still have hope that things can turn”.

On the bottom in Mozambique, the mission has been suspended due to a vicious armed insurgency, which has pressured about one million individuals to flee.

In October 2022, Complete mentioned it was making ready to restart the mission in early 2023. It made comparable bulletins in 2022.

Case for the defence

A spokesperson for Wooden Mackenzie mentioned that the corporate had delivered what the consumer had requested for and the consumer had accepted its work.

The spokesperson mentioned the corporate “did include analysis of scope three emissions with clear guidance about potential constraints to the analysis”.

A spokesperson for Complete mentioned that the mission’s operational emissions are decrease than different comparable tasks, Complete helps conserving temperatures nicely beneath 2C above pre-industrial ranges. They claimed that gasoline is a “transition fuel” which is able to displace coal and assist Complete meet its goal to succeed in internet zero by 2050.

The spokesperson added that Complete “strongly refutes” claims that the invention of gasoline has worsened armed battle. They pointed to the creation of an financial growth data workplace within the metropolis of Pemba and a promise to coach greater than 2,500 younger individuals.

A spokesperson for UK Export Finance informed Local weather Dwelling they welcomed the courtroom’s newest determination and “stay assured that UKEF follows sturdy and internationally recognised due diligence earlier than offering any assist for abroad tasks”.

They mentioned the UK authorities not helps fossil fuels abroad besides in restricted circumstances and is “committed to helping countries across the globe move away from their dependence on fossil fuels and accelerate to net zero”. UKEF has pledged to assist extra inexperienced exports and decarbonise its portfolio by 2050.

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