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The UK government has awarded its first government-backed “transitional green loan” to a company that is helping Wood Group, an engineering and energy consultancy, expand its low-carbon product and service offerings.

UK Export Finance (UKEF), the UK lending agency, provides 80% of the loan through an Export Development Guarantee (EDG) – a loan given to UK companies exporting around the world to cover operating or capital expenditures.

The loan has a term of five years and during that time Wood Group will use the money to accelerate the growth of its business offerings that enable customers to reduce their carbon footprint. In particular, the company has committed to doubling its customer support by 2030, with all of the growth coming from projects related to the energy transition and sustainable infrastructure.

A portion of the funding will also support Wood Group’s R&D efforts in sectors that could facilitate the low carbon transition, including wind, solar, wave and tidal power; Bioenergy; Energy storage; Separation, use and storage of hydrogen and carbon (CCUS).

In the loan agreement, Wood Group committed itself to “significantly reduce” its own emissions over the five-year period. The company aims to reduce its Scope 1 (direct) and Scope 2 (electricity-related) emissions by 40% by 2030 compared to the starting value for the 2018-2019 financial year. Wood Group is also committed to creating more green jobs in the years to come.

Robin Watson, Wood Group CEO, said: “We recognize the unstoppable momentum of the energy transition and strive to provide practical solutions for a net zero future. We are already well advanced with our own conversion, we are consciously expanding our portfolio in the field of energy and supporting our customers in achieving their own CO2 reduction targets.

“The support of the UKEF will enable us to accelerate this path and seize the many opportunities that arise in building the low-carbon energy systems of the future.”

UK Secretary of State for Scotland David Duguid added: “It is fantastic to see the UK Government’s first Transition EDG going to a Scotland based company that is helping to support low carbon jobs across the UK.

“As we prepare to host COP26 in Glasgow later this year, this announcement marks another major milestone in the UK’s energy transition and shows how free trade will help meet our net zero targets.”

The UK government committed last year to stop funding fossil fuel projects abroad, through UKEF and others. Overseas fossil fuel projects will be removed from the EDG approval criteria ahead of COP26 in November. It is estimated that the diverted funds could support more than 40,000 jobs in green sectors by 2035.

Export opportunity or disguised business-as-usual?

On Duguid’s stance on free trade, the Board of Trade released a report this summer warning against “green protectionism” – measures that would make it difficult for Britain to export and import low-carbon technologies.

She called on the UK to encourage other countries to lower tariffs on technologies for sectors such as renewable energy, energy efficiency and electric vehicles (EVs). At the same time, the UK should not introduce a carbon border adjustment tax, the report argues.

Green groups called this approach “gentlemen” and urged the UK government to reinforce its own net zero policy at home and abroad.

Read the latest edition of edie COP26 action tracker.

Sarah George