G7 Gives Qualified Support to Investment in Gas

G7 leaders have agreed that public investment in natural gas can be appropriate as a “temporary response” to the energy crisis caused by Russia’s war in Ukraine and that LNG in particular has an “important role” to play.
At their summit meeting in the Japanese city of Hiroshima, they stressed the importance of making further progress toward ending the G7 nations’ remaining dependence on Russian energy.
Considerable progress has already been made on reducing imports of Russian oil and gas.
But the final communique from the summit made no reference to restricting imports of Russian LNG, nor of banning the future resumption of gas imports via pipelines that have already stopped supplying the region.
The communique reflected a delicate balancing of interests, with host country Japan highly dependent on LNG imports and Germany scrambling to offset the loss of pipeline gas imports from Russia.
Japan imports slightly less than 10% of its LNG from Russia and two of its companies hold a combined stake of 22.5% in Russia’s Sakhalin-2 LNG facility.
Before Russia’s invasion of Ukraine Germany was Europe’s biggest importer of Russian pipeline gas by far, but over the last year or so it has been scrambling to build significant LNG import capacity.
Avoiding ‘Lock-In’ Effects
The communique released after the G7 summit in Hiroshima at the weekend broadly echoed the messaging that followed a G7 ministerial ministerial meeting in Sapporo last month.
“We stress the important role that increased deliveries of LNG can play, and acknowledge that investment in the sector can be appropriate in response to the current crisis and to address potential gas market shortfalls,” it said.
“In the exceptional circumstance of accelerating the phaseout of our dependency on Russian energy, publicly supported investment in the gas sector can be appropriate as a temporary response,” the G7 leaders added.
The communique said such investment should be “implemented in a manner consistent with our climate objectives without creating lock-in [demand] effects, for example by ensuring that projects are integrated into national strategies for the development of low-carbon and renewable hydrogen.”
Germany and Japan had pushed for the inclusion of language in support of public investment in natural gas sector, while other G7 members argued that it would be at odds with their commitment to cap global warming at 1.5° C.
US officials reportedly said during the summit that public funding for gas infrastructure should only be allowed in “narrow circumstances” and consistent with countries’ plans to rein in their greenhouse gas emissions.
Green Groups Unhappy
The communique’s references to gas irked environmental groups, which accused the G7 of backtracking on a prior commitment to halt public financing for fossil fuels by the end of last year.
“The G7’s continued approval for public investment in the gas sector, led by Germany and Japan, is in direct breach of that commitment and severely undermines progress made,” said Louise Burrows of climate think tank E3G.
Given that the acute energy crisis in the early phase of the war in Ukraine has now passed, Burrows called on the G7 nations to prioritize public investment in clean, non-fossil energy.
Greenpeace said that by “endorsing new fossil gas in the midst of ongoing climate emergency” the G7 leaders had demonstrated “a complete denial of the havoc fossil fuel emissions have been wreaking on our planet.”
Phasing Out Coal
The G7 leaders reaffirmed the group’s commitment to achieve a “fully or predominantly” decarbonized electricity generating system by 2035 and to accelerate the phasing out of “unabated” coal-fired power generation.
Japan has been promoting the co-firing of coal with ammonia as a way of reducing emissions from coal-fired power, but this has drawn criticism that it will prolong the use of coal and slow down progress on the climate.
E3G said it hopes to see further momentum toward phasing out coal at the upcoming G20 summit in September and the UN’s COP28 climate conference in November and December.

About Parvin Faghfouri Azar

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