Court of Appeal hears claim that UK Government $1billion finance for Mozambique gas project is unlawful

The Government’s decision to finance a fossil fuel project in Mozambique with $1billion will be challenged at the Court of Appeal on Tuesday 6 December.

Posted on 06 December 2022

Friends of the Earth says the decision by UK Export Finance (UKEF) to provide the finance package – one of the biggest ever offered to a foreign fossil fuel project by the Department of Trade and Foreign Affairs – was unlawful, including due to the failure of UKEF to calculate the emissions that will be produced from the end-use of the liquid natural gas (LNG).

That omission meant – so it is argued – that the UK Government could not have rationally concluded that the funding was compatible with the Paris Agreement.

The $20bn project by Total E&P will extract 43 million tonnes of LNG per annum for 32 years from offshore gas fields in Cabo Delgado, and create 4.3 billion tonnes of combusted emissions.

Divisional Court judges gave permission for appeal when they were divided over the grounds at issue that Friends of the Earth had claimed in their application for judicial review in 2020.

In March 2022 they allowed the appeal to proceed to a full hearing on the following grounds:

The Defendants failed in their duty of sufficient inquiry by (i) not quantifying the indirect downstream greenhouse gas emissions from the processing and use of the LNG generated by the Project and/or (ii) only carrying out a high-level, qualitative review of those emissions.
The Defendants were required to adopt a view of the Paris Agreement that was more than merely “tenable”.
There was no rational basis on which the Defendants could conclude that the decision to provide funding was compatible with Article 2(1)(c) of the Paris Agreement.

In doing so, the Divisional Court recognised that the grounds have “real prospects of success”, and the question of whether the legal test is that the UKEF only required a “tenable” view (of what was required by the Paris Agreement) additionally “raises a point of general importance which provides a compelling reason for an appeal to be heard”.

Leigh Day solicitor Rowan Smith, who represents Friends of the Earth, said:

“At the heart of this appeal is a fundamental question of climate change law: is it lawful for the UK government to conclude that financing fossil fuel projects abroad, which will lead to an increase in emissions, is compatible with the Paris Agreement?

“The Court of Appeal’s answer is likely to be a defining moment in climate change litigation.

“Friends of the Earth is clear: without calculating the amount of carbon emissions arising from the use of liquid natural gas extracted from Mozambique, the manner in which the UK government approved the financing was unlawful. We look forward to making those arguments in Court this week.”

Friends of the Earth’s head of legal, Will Rundle, said:

“UKEF not only helped finance the project but it failed to measure all the emissions it would produce – misleading ministers about the scale of its impact. This is a complete failure of credible governance and morally unacceptable in a climate crisis.

“Climate assessments for fossil fuel projects must measure all the emissions, period. We need to understand the climate impacts of spending taxpayers' money, so we can decline carbon intensive investments like this and fund renewable energy projects instead.”

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Court of Appeal hears claim that UK Government $1billion finance for Mozambique gas project is unlawful

Rowan Smith

Friends of the Earth will appeal as judges divided over lawfulness of UK Government investment in Mozambique gas project

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