Two more reinsurers have joined the slew of companies refusing to provide coverage to a proposed US$5-billion crude oil pipeline in East Africa that campaigners say would be disastrous for the climate and to its host countries.
Arch Capital Group Ltd and AEGIS London have joined 19 other reinsurers declaring they’ll steer clear the East African Crude Oil Pipeline (EACOP), a 1,443-kilometre project proposed in Uganda and Tanzania. This latest refusal threatens its viability, since Ugandan law requires that the project secure international coverage, Nexus Media reports.
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AEGIS said it is withholding insurance because EACOP does not align with its environmental, social, and governance (ESG) policy. Arch’s decision followed international pressure to reject the pipeline—after campaigners spent months exposing its climate, environmental, and social risks, and human rights violations. Arch’s announcement came days after activist organization Money Rebellion spilled fake oil outside its London offices, reports Reinsurance News.
“We’re happy with the Arch and AEGIS announcements, but people shouldn’t still have to push for change,” said Rafela FitzHugh from Money Rebellion. “With deadly weather destroying lives across the world, the insurance sector should be turning its back on all new fossil fuel projects.”
Citizens resisting the EACOP in Uganda and Tanzania are facing arrest and human rights abuses, FitzHugh added. Money Rebellion has written to insurance companies that have not yet refused to back the project—like Canopius Group, Brit, and Chaucer—warning them to “expect us on their doorstep” if they don’t rule out support for EACOP.
The pipeline’s main backers are French oil company TotalÉnergies and the China National Offshore Oil Corporation (CNOOC), the Guardian reports.
If it goes ahead, EACOP will displace entire local communities in a land grab that would offer “paltry compensation” that is below market value and insufficient for displaced persons to purchase new plots. The project is also expected to cause a range of environmental damages, including biodiversity loss and destruction of critical habitat, Yale Environment 360 says. The pipeline would also result in emissions of 379 million tonnes of carbon-dioxide equivalent (CO2e) during its operating life, found [pdf] the Climate Accountability Institute.
The world’s four largest reinsurance companies—Munich Re, Swiss Re, Hannover Re, and SCOR—have all refused to cover EACOP. Days before the Arch and AEGIS announcements, East Africa-focused financial services provider Britam Holdings also backed away from the project, citing an internal environmental and social risk evaluation that showed the pipeline “violated its backers’ policies and performance standards,” reports The EastAfrican.
TotalÉnergies has pushed back on the claims that the project fails to meet environmental and social standards. The Ugandan government also decried the criticism, saying the project will boost the economy and bring energy security. In response to a European Union resolution passed in September to halt the pipeline, Uganda President Yoweri Museveni vowed to proceed and said his government would look for other partners in case Total chose to “listen to the EU Parliament.”
Uganda adds that western countries are wrong to condemn EACOP, pointing to their comparatively high emissions, Uganda’s greater use of renewable sources in its energy mix, and the scramble by European countries to secure African fossil fuels after Russia invaded Ukraine, says the Mail & Guardian.
“This is the purest hypocrisy,” Museveni said. “We will not accept one rule for them and another rule for us.”
But opponents say exploiting oil resources has not improved economies or living conditions in other African countries like Nigeria, Angola, or the Democratic Republic of Congo. “Instead, it has brought poverty, violence, and the loss of traditional lands and cultures,” Ugandan climate campaigner Vanessa Nakate wrote last fall. In a post last week for DeSmog UK, Cameroonian peace activist Sylvie Jacqueline Ndongmo and Liberian Nobel Peace Prize laureate Leymah Roberta Gbowee, both members of the Women’s International League for Peace and Freedom, called for a Fossil Fuel Non-Proliferation Treaty to end violence against women in Africa, and against the continent as a whole.
Other critics warn the pipeline would help to entrench Museveni’s rule, which began in 1986 and has been perpetuated through constitutional amendments to remove presidential age limits. Organizations like Don’t Gas Africa say that investing in renewable energy generation is a better option for building the economy, adding that the oil from the pipeline is likely to be exported to Europe and will not improve energy security.
“I think it’s unfair that they keep using the excuse that they’re trying to develop Africa,” said Omar Elmawi, a campaigner in Kenya for the StopEACOP organization.
“In reality what they’re doing is stealing resources and robbing us in broad daylight.”
