G7 leaders pledged to end overseas public finance for fossil fuels but made exceptions for temporary gas investments deemed “necessary” to address the energy crisis
The G7 group of wealthy countries has weakened a pledge to end finance for foreign gas projects, under the urging of Germany’s leader Olaf Scholz.
At Cop26 last year, six G7 countries agreed to end public finance for fossil fuel projects overseas by the end of 2022 – a commitment which was reaffirmed by G7 environment ministers at a meeting in May, when hold-out Japan joined them.
G7 leaders meeting in Germany’s Bavarian Alps this week added new loopholes for the pledge. In a joint communique published Tuesday, they “stress[ed]The importance of increasing LNG delivery [gas] can play” in accelerating the phase out of their dependency on Russian energy and “acknowledge[d] that investment in this sector is necessary in response to the current crisis”.
“In these exceptional circumstances, publicly supported investment in the gas sector can be appropriate as a temporary response,” the statement adds.
German chancellor Scholz told a press conference: “When it comes to financing fossil sources of energy, this is something that has to come to an end. The future does not lie in gas.” But, he added: “In the short-term, gas is going to be necessary and there can be investments in the transitional phase which are going to have to be supported”.
To stop funding Russia’s war on Ukraine, European countries have sought to boost gas supplies from non-Russian sources including the US, Qatar, Algeria, Norway, Egypt and Israel.
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Climate campaigners were furious. Laurie van der Burg, campaigner at Oil Change International, said: “Today, the G7 under the leadership of chancellor Scholz has prioritised filling the pockets of the fossil gas industry over protecting peoples’ lives.”
She stated that support for natural gas must be temporary, consistent and consistent with climate objectives, including 1.5C, and not create an effect of lock-in.
Van der Burg said these conditions meant new gas investments should not happen because new gas infrastructure takes years to build, it doesn’t provide a viable solution to rapidly wean off the G7 from Russian gas and it isn’t consistent with climate goals.
The International Energy Agency warned that any new investments in oil, coal, and gas beyond 2021 are incompatible with a pathway for limiting global warming to 1.5C.
Luca Bergamaschi, director of the Italian climate think tank ECCO, agreed that the climate conditions for temporary gas investments to continue and competition from clean alternatives “mean there is little to no investment case for new gas” without them being “artificially subsidised”.
For Gareth Redmond-King of the UK-based Energy and Climate Intelligence Unit, the statement reflects G7 nations’ “responsibility to feed people and keep the lights on”. “Short-term surges in fossil fuels can, as the EU is showing, be trumped by more ambitious emissions pledges in the medium-term,” he said.
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An earlier version of the text, seen by Climate Home News, shows a proposal to describe new gas investments as “can/could be necessary”. Climate Home Scholz was directly suggested by sources close to the talks. It was opposed by France and the UK, but supported by Italy.
On a recent visit to Senegal, Scholz said that supporting the West African country’s gas production plans was “a matter worth pursuing intensively“. Senegal’s leader Macky Sall was invited to the G7 summit along with the president of gas-producing Argentina Alberto Fernández and the leaders of India, Vietnam and Indonesia.
Italy’s president Mario Draghi told a G7 press conference: “It’s quite clear that in the present situation, we’ll have short-term needs that will require large investments in gas infrastructure in developing countries and elsewhere. But we have to make sure that they can be retrofitted to carry hydrogen so that’s a way to reconcile short-term needs with long-term climate needs”.
On the sidelines of the summit, Draghi met with his Argentinian counterpart Fernández. The two men discussed the possibility of Italy “participating in existing projects in Argentina to install gas liquefaction plants and export it,” Fernández said in a tweet.
The G7 further confirmed it was pursuing ‘just energy transition partnership’ agreements with India, Vietnam, Indonesia and Senegal as well as previously-announced talks with South Africa.
Con el presidente del Consejo de Ministros de Italia🇮🇹, Mario Draghi, dialogué sobre la posibilidad de que su país participe en los proyectos existentes en la Argentina para instalar plantas de licuación de gas y exportarlo.
Seguiremos potenciando los intercambios. pic.twitter.com/LO3O75GV5o
— Alberto Fernández (@alferdez) June 27, 2022
Joe Thwaites, climate finance watcher notedCountries that have committed to ending international fossil fuel finance spend approximately $33bn annually supporting foreign coal, oil and natural gas projects. According to OECD data, the rich countries fell short of $100 billion a year in 2019 to help developing countries address climate change.
Thwaites suggests that the gap can be closed by switching fossil fuel finance to climate finance. said, adding: “Hard to think of a better deal: end fossil fuel financing that’s driving the climate crisis and use it to increase funding for clean energy access in developing countries. A genuinely rare win-win.”
In the communique, G7 leaders promised to “intensify our efforts” to deliver on the $100bn goal “as soon as possible”.
A recent Overseas Development Institute (ODI) report found that “the US is overwhelmingly responsible for the climate finance gap”. In 2020, it gave just $2bn in climate finance when its “fair share” is $43bn, according to calculation that includes the size of its economy and historical emissions.
ODI’s research found that Italy, the UK and Canada were each $3bn short of their fair share. Germany, France and Japan give more than their fair share but the report questions the quality of France and Japan’s finance, as much of it is loans.
Source: Climate Change News