The Group of Seven western industrialized countries set a 2035 deadline to decarbonize electricity generation, promised to end international public financing of fossil fuels this year, cited Russia’s war in Ukraine as a catalyst for a faster fossil phaseout, but left themselves a long list of agenda items on climate finance as they tied up a marathon series of ministerial meetings in Germany last week.
The G7 environment, climate, and energy ministers pledged to make their electricity systems “predominantly” carbon-free in what analysts hailed as a “big step ahead,” Clean Energy Wire reports. But with the United States and Japan putting up roadblocks, the countries fell short of promising an end to coal-fired power generation, committing only to “an accelerated global unabated coal phaseout”.
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That was a step down from an earlier draft of the meeting communiqué viewed by Reuters, in which the ministers committed “to phase out domestic unabated coal power generation and nonindustrial coal-powered heat generation aiming at the year 2030”, deliver a “net zero electricity sector by 2035″, and begin public reporting next year on the goal of (finally) phasing out “inefficient” fossil fuel subsidies by 2025.
Observers warned that “the to-do list for the G7 summit of heads of state and government next month in Bavaria remains long,” Clean Energy Wire writes, “given that there was also little progress on climate financing and other issues.” That meeting will bring together the heads of government of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.
A Fast Transition for Europe
The ministerial meetings did hold firm to the position that the urgent, short-term need to end Europe’s dependence on Russian oil and gas must not delay the larger transition off fossil fuels.
While Canada is considering pathways to export liquefied natural gas (LNG) to Europe in as little as three years, “it is very clear, both for us and for Germany, that this is a short-term solution,” Environment and Climate Minister Steven Guilbeault told Radio-Canada. Germany is not just looking to replace Russian gas, but to “end its addiction to fossil fuels, period,” he said.
“There’s a sense that, if we don’t support each other as democratic countries, the chances of us getting through this on a global scale are very slim,” he said, adding that new LNG exports won’t increase greenhouse emissions if they’re just a matter of Canadian gas replacing Russian supplies. [As The Mix has reported, that’s true as long as Canadian fossil exporters can commit to the shorter-term contracts that countries like Germany are looking for—which will in turn depend on whether any investor will back a shorter, less lucrative deal.—Ed.]
“One of the biggest positive themes was the linkage of climate solutions to the energy and national security agenda,” Alden Meyer, senior associate at the E3G climate consultancy, told The Energy Mix. “There’s a clear connection that what’s going on in the world with the war in Ukraine, energy price volatility, supply shocks, critical minerals, all those dynamics are reasons to accelerate the transition from fossil fuels, not a reason to start looking for [fossil] resources elsewhere, just outside Russia.”
European climate analysts greeted the grid decarbonization language as a major win.
“The G7 have just changed the game for the global energy transition,” said Phil MacDonald, COO of the Ember climate think tank. “The science shows that decarbonizing electricity by 2035 is the quickest and cheapest way to net-zero. The past few years have made abundantly clear the many benefits of moving away from fossil fuels, and the G7 are now in agreement that this ambitious target is achievable and desirable.”
‘‘Committing to a decarbonized power sector by 2035, even ‘predominantly’, is an important signal that G7 countries are aligning their power sector transition to the IEA’s scenario for achieving 1.5°C,” said E3G Senior Advisor Pieter de Pous. “It reflects Germany and the EU responding to the war against Ukraine by accelerating energy savings and renewables policies, as well as a recognition by Japan that it will need to achieve this benchmark to avoid being isolated from its peers. It will now need follow-up, especially by Japan and the U.S., to set out how they will align their energy transition plans to have coal-free power by 2030.”
Ending International Public Finance for Fossil Fuels
The G7 also committed to end international public financing of “unabated” fossil fuel projects by the end of this year, following up on a plan adopted by 39 countries and institutions at last year’s COP 26 climate summit in Glasgow. At last count, Export Development Canada stood out as the world’s biggest offender in that area, with an average of US$11 billion per year in international subsidies between 2018 and 2020. The annual total across all G20 governments exceeded $100 billion.
The meeting communiqué contained “very strong rhetoric” on that issue, with “the whole phrasing of the fossil fuel finance cut-off framed as a key part of true energy security,” Meyer said. “The down side is that individual G7 countries, particularly Germany and Italy, are running around Africa and elsewhere trying to secure short-term sources of particularly natural gas, so there’s a little bit of duality. In the long term we have to get off fossil fuels, but in the short term we’re scrambling for new supplies because we want to really accelerate the transition from Russian fossil fuels,” which he said is understandable given those countries’ dependence on Russian supplies.
“The G7 committing to end public finance for fossil fuels and shift it to clean is a massive win,” Laurie van der Burg, public finance campaign co-manager at Oil Change International, said in a release. “In the context of Russia’s fossil-fuelled war and signs that some of the G7 members who agreed to end their public fossil finance last November may backslide by pursuing new gas investments, this statement is a timely reconfirmation that the most viable pathway to energy security is prioritizing public finance for clean energy.”
With $33 billion in fossil financing from the G7 alone to be shifted into clean energy, van der Burg added, “these promises should now urgently be turned into action.”
“Japan is the second largest provider of public finance to fossil fuels, so this is a significant step,” said Ayumi Fukakusa, climate and energy campaigner at Friends of the Earth Japan. “However, Japan has a bad track record of implementing its commitments,” with plans to support new coal projects in Indonesia and Bangladesh despite the G7 commitment. Fukakusa called on the country to “implement its commitments with integrity to shift the actual flow of money” and accelerate electricity decarbonization in its own economy without resorting to nuclear generation.
A Watered Down Promise on Coal
Meyer said the coal phaseout commitment was watered down due to objections from the U.S. and Japan, each for their own reasons.
“For the U.S., it’s that they don’t want to complicate the already difficult negotiations with Sen. [Joe] Manchin and others in Congress around the domestic climate and energy incentives package, and agreeing to language that set a date for the end of coal would be like waving a red flag in front of a bull,” he explained. But the Biden administration’s commitment to a carbon-free grid by 2035 “pretty much implies phasing out most coal by 2030.” So “you could see the U.S. achieving that, but they don’t want state it as a commitment or a binding objective.”
The picture is a bit different in Japan, where the government sees coal still supplying 18 to 20% of its electricity at the end of this decade. Analysts said the G7 ministers were hesitant to push Japan too hard on that point, knowing they would need the country’s buy-in on a host of other topics on the G7 agenda.
Shifting the Trillions
The other big issue was the need to “shift the trillions” on the various facets of international climate finance and raise annual investment in climate solutions and adaptation from $150 billion today to $1 trillion by 2030.
“There is some language about the need to shift the trillions in the climate ministers’ communiqué, but it’s not explicit about whether that means developed or developing countries,” or how the G7 will actually take action on their promise, Meyer said. “Yes, they need to ramp up public bilateral aid, yes they need to push the World Bank and other multilateral development banks to do more, but the real play here is reversing the current three-to-one ratio of investments in fossil fuels versus clean energy projects in the private sector. That’s where the real money is.”
Keeping Climate Action On Track
Going into the ministerial meetings, news reports had the G7 countries struggling to keep their climate agenda on track in spite of the energy supply crisis caused by Putin’s war. “The invasion of Ukraine by Russia has triggered a scramble among some countries to buy more non-Russian fossil fuels and burn coal to cut their reliance on Russian supplies, raising fears that the energy crisis triggered by the war could undermine efforts to fight climate change,” Reuters wrote last week.
So the push was on to keep the ministers on track to keep their climate promises despite the short-term pressure they face.
“We have a new reality now,” said David Ryfisch, a climate policy specialist at Bonn-based Germanwatch. “The G7 need to respond to that, and they should respond through renewables, and not through fossil fuel infrastructure.”
With the series of ministerial meetings well under way, the World Economic Forum annual meeting in Davos, Switzerland heard loud pleas to keep up momentum on a bold climate agenda. “We should not allow a false narrative to be created that what has happened in Ukraine somehow obviates the need to move forward and address the climate crisis,” U.S. climate envoy John Kerry told an energy transition panel last Tuesday.
But IEA Executive Director Fatih Birol took a somewhat more nuanced view of the short-term crisis Europe faces. “It is all legitimate to provide energy security and address this immediate emergency question,” he said. “However, this should not be confused [with] making a large-scale, new wave of fossil fuel investments.”
None of which spoke the remaining gap between the G7’s best targets and the trajectory that would be needed to keep average global warming to 1.5°C.
In mid-May, Climate Analytics published a six-point plan of action for the G7 that called for a 60% emissions reduction from 2010 levels by 2030, stronger 2030 targets that align with a 1.5°C target, phaseout dates of 2030 for coal and 2040 for fossil gas, an end to public support for fossil fuel projects, and a tripling in low-carbon energy investment by 2030.
“In the current volatile geopolitical situation, it has become clear that moving away from fossil fuels to sustainable, renewable energy systems not only brings the necessary emissions reductions but is also a matter of security,” the report said [pdf]. But “none of the G7 member countries are on track to meet their current, insufficient 2030 targets.”
That means the countries must “rapidly close this implementation gap to ensure the credibility of targets, maintain a strong signal to domestic and global markets that the low-carbon transition is under way, and avoid risks of carbon lock-in and stranded assets.”
But those commitments ultimately hinge on dollars. Analysts said the heavy lifting on climate finance was handed off to the three-day heads of government meeting next month, where there will only be limited time and space for any discussion related to climate.
“The leaders will be dealing with Ukraine, the economy, the food price crisis, national security issues, a whole range of things,” Meyer said. “Climate will be on the agenda, but it won’t be the centrepiece.” And yet, with Japan taking its turn next year in the G7 presidency, 2022 will be the best moment for the seven countries to agree on ambitious climate action over the next many months.
Clean Energy Wire recalls that formation of an international “climate club” to drive faster, deeper carbon cuts was at the top of the agenda Germany published for its year as G7 president, just a month before the Russian invasion began. But that thinking “only played a minor role at the ministers’ meeting given that it was a decision the heads of state would have to take,” the Berlin-based e-newsletter states.
Brick Medak, head of E3G’s Berlin office, took issue with the “vague phrasing” in the coal phaseout commitment and pointed to climate finance as “the weakest point” in the ministerial declaration. He called on Chancellor Olaf Scholz to “show at the level of heads of state and government that he is willing to go beyond his pet project, the Climate Club.”