When green energy becomes contested, downstream effects of withdrawing fossil fuel support

When green energy becomes contested, downstream effects of withdrawing fossil fuel support | Photo: Denys Nevozhai

The abrupt decision by UK Export Finance (UKEF) to withdraw its US$1.15 billion backing for Mozambique’s LNG mega-project has landed like a marker on the long and uneven road to a cleaner global economy. It signals a turning point in how governments weigh energy security, climate vulnerability and the moral hazards surrounding large-scale fossil-fuel developments. At stake is not only the future of a single gas project, but the credibility of a global transition that aspires to be fair, economically viable and socially protective. For nations such as Mozambique, already navigating conflict, inequality and climate exposure, the choice between fossil-fuel revenue and sustainable resilience grows sharper with every reassessment. In this context, solving the policy impasse matters not only for national development ambitions, but for the integrity of one SDG goal centred on affordable and clean energy.

A withdrawal that reshapes expectations

On 1 December 2025, UKEF revoked its financial guarantee for TotalEnergies’s Mozambique-LNG development after concluding that security, environmental, human-rights and financial risks had “increased since 2020.” The project had already been suspended following a violent insurgent attack in Cabo Delgado province in 2021. Days later, the Dutch government followed suit, reinforcing the impression that publicly funded export credit is drifting away from fossil-fuel ventures viewed as too volatile.

This response aligns with a broader recalibration: export-credit agencies, long the quiet enablers of oil and gas infrastructure, are becoming more cautious. The rising sensitivity to conflict risk, displacement, emissions and fiscal uncertainty illustrates how fossil-fuel support is losing its reputation as a dependable instrument of development. According to global export-finance disclosures, public support for fossil-fuel infrastructure has already declined by more than 20 per cent over the past three years, while renewable-energy backing has grown steadily. The withdrawal from Mozambique fits a discernible pattern rather than an isolated gesture.

Why the Mozambique decision reverberates globally

The symbolism matters. When major public lenders retreat, private banks and insurers tend to reassess their exposure. For institutions balancing climate-transition mandates with financial prudence, Mozambique’s case sets a precedent that high-risk LNG projects carry liabilities beyond carbon footprints. The inclusion of human-rights and security concerns expands the definition of what constitutes an unsustainable investment, making it harder for similar projects to present themselves as neutral stepping stones toward development.

For Mozambique, however, the implications are more finely balanced. The LNG project promised employment, infrastructure upgrades and projected state revenues running into the billions. Its delay or downsizing risks slowing GDP growth forecasts that were previously tethered to expected LNG exports in the early 2030s. A World Bank analysis shows that countries dependent on single-resource megaprojects often overestimate revenue stability and underestimate social risk, but the immediate economic disruption remains tangible.

Yet the story is not concluded. The US Export–Import Bank approved a multibillion-dollar loan for the same development in 2025, suggesting that while European agencies are pulling back, other financiers remain willing to shoulder the risk. The result may not be a clean rejection of the project, but a shift in geopolitical underwriting, raising concerns about uneven accountability and what critics label carbon colonialism.

A contested transition with uneven consequences

The tension lies in a simple contradiction: the global energy transition requires phasing out fossil-fuel infrastructure, yet many lower-income countries view gas projects as gateways to growth. For Mozambique, the withdrawal threatens jobs and local economic activity already buffeted by conflict. For communities near the project site, uncertainty deepens. Some residents fear losing employment prospects, while others worry that renewed construction would intensify displacement, environmental stress and security vulnerabilities.

Even at the global level, the implications are complex. Redirecting investment from fossil fuels towards renewables is essential for meeting climate targets, yet abrupt cancellations can leave development gaps. Energy economists warn that unless alternative financing for renewable and distributed energy systems scales concurrently, countries may face a “transition deficit,” where climate-aligned policies outpace economic support.

Statistics reflect the challenge. While renewables now attract roughly 70 per cent of new global power-generation investment, only 15 per cent of that flows to Africa. This mismatch highlights why high-profile withdrawals, though aligned with climate goals, might inadvertently deepen inequality unless replaced with equally robust clean-energy finance.

What this moment signals for the future

The Mozambique withdrawal exposes an emerging pattern in international finance. Public lenders are increasingly reluctant to back fossil-fuel projects that present layered risks, but private or non-Western financiers may still proceed. The result is a fragmented transition rather than a coordinated pivot.

Observers are watching several developments:

·       whether more governments emulate the UK and Dutch decisions, further shrinking public fossil-fuel support

·       how Mozambique and other resource-rich states recalibrate energy strategies, potentially advancing solar and wind projects with lower security and social costs

·       whether civil-society groups leverage this precedent to challenge new fossil-fuel proposals on multidimensional risk grounds

·       and whether companies such as TotalEnergies can restructure financing, demonstrating that public pressure may redirect, but not necessarily halt, controversial ventures.

For global climate governance, the moment underscores a broader redefinition of risk. Fossil-fuel investments no longer fail or succeed solely on market prices but on social cohesion, political stability and environmental resilience. The Mozambique case illustrates how contested the concept of green energy becomes when transitions intersect with conflict, inequality and the uneven geography of finance.

For deeper exploration

Readers interested in the wider implications of export-finance reform, climate-aligned development pathways and alternative energy models may find these global research initiatives helpful:

·       Sustainable energy for all: https://www.seforall.org

·       Climate Policy Initiative tracking of energy finance: https://www.climatepolicyinitiative.org

·       International Renewable Energy Agency data and transition scenarios: https://www.irena.org

As the world edges towards a low-carbon future, the challenge is not only to withdraw from fossil-fuel dependency but to do so in ways that uphold fairness, resilience and genuine opportunity for countries at the frontline of change.