The G7 fossil fuel pledge – and what it could mean for the climate

Some of the world’s largest economies have agreed to turn off the taps on the majority of public investment in overseas fossil fuel projects by the close of the year. 

Climate ministers from G7 nations – the UK, Japan, US, Canada, France, Italy and Germany – set the deadline for ending taxpayer funding for overseas oil, gas and coal projects for the end of 2022, during a two-day conference in Berlin in May. 

Analysts say the move could shift around £26bn a year from fossil fuels to clean energy, helping plug a yawning investment gap identified by the Intergovernmental Panel on Climate Change in a reportPublished March.

The panel found that investment in clean energy was three to six times lower than the level needed by 2030 to limit warming to below 2C, and called for “clear signalling” from governments and the international community to boost investment in renewable energy infrastructure. 

The G7 climate & energy communique was widely seen as a step in right direction, following up on the commitments made at Cop26. 

Ministers also agreed to substantially decarbonize electricity sectors by 2035 and phase out coal-fired power stations. 

They also mentioned the need to provide financial support to vulnerable countries that are dealing with the impacts of the climate crisis. 

The pledges are not only about tackling climate change, but also address national security concerns by increasing clean energy capacity and shifting away from dependence on Russian gas. 

Japan’s commitment is seen as particularly significant as it had previously resisted such a pledge before last year’s Cop26, and relies heavily on coal-fired power stations. 

Loopholes 

But despite the progress, some commentators suggest the G7 announcement contains mixed messages – and troublesome loopholes. 

The climate commitments came with a call for the Organisation of the Petrochemical Exporting Countries (OPEC) – a cartel of 13 states, which together account for almost half of global oil production – to help ease price pressures by pumping out more liquefied natural gas in response to “tightening international markets” resulting from the Ukraine invasion. 

The 39-page communique also contains a “loophole” that, somewhat vaguely, exempts nations from ending investment in overseas fossil fuel projects “in limited circumstances clearly defined by each country consistent with a 1.5C warming limit”. 

Public funding may still be available for projects in the pipeline of new oil and natural gas. A Guardian investigation discovered 200 of these ‘carbon bomb’ projects, so-called because they threaten to derail the 1.5C target. 

The University of Leeds’s carbon bomb research team was led by academics. Last month, they said that an international coalition of campaigners was forming to combat the threat.

Main image: Ehimetalor Ashire Unuabona