Japan-hosted G7 Ministers falsely claim they have ended fossil fuel finance, leave door open to gas investments

SAPPORO – Today, G7 Climate, Energy and Environment Ministers issued a communique ahead of next month’s G7 Leaders Summit that leaves the door open for investments in new capacity and endorses fossil fuel-based technologies promoted by Japan, this year’s G7 host. This contradicts the International Energy Agency’s (IEA) most recent G7 analysis, reaffirming that no new gas fields or liquefied natural gas (LNG) infrastructure should be developed nor is needed in a scenario that limits global warming to 1.5°C.

The agreed text says “investment in the gas sector can be appropriate to help address potential market shortfalls provoked by the crisis, subject to clearly defined national circumstances, and if implemented in a manner consistent with our climate objectives and without creating lock-in effects…” 

Ministers succeeded in pushing back against the G7 host Japan which had hoped to agree that there is “a need for investments in natural gas and LNG” and added caveats to the language on gas. For the G7 to meet the condition that gas investments are consistent with climate objectives, however, they should, as follows from the IEA’s 1.5°C scenario, explicitly exclude any investments in new gas and LNG. That scenario shows that no new gas fields should be developed, while liquefied natural gas (LNG) projects already under construction should remain unutilized and existing LNG capacity needs to be decommissioned early (see IEA graph copied below). G7 countries have under the Paris Agreement agreed to “pursue efforts to limit global warming to 1.5°C” and leaving the door open for new gas investments leaves them off track. 

It also directly contradicts last year’s groundbreaking G7 commitment to end international public finance for fossil fuels by the end of 2022. New OCI analysis underlines the significance of this commitment showing that between 2020 and 2022 the G7 provided USD 78 billion in public finance for fossil fuel projects, 2.6 times their support for clean energy. Today’s text claims that the G7 have met this commitment and have “ended” their international fossil fuel finance, but OCI analysis shows this is untrue. While the United Kingdom, Canada and France have put a halt to their international fossil fuel finance, Japan, Italy and Germany have not and have approved new investments in fossil fuels in 2023. The United States has reportedly adopted guidelines to restrict fossil fuel finance, but has not made these public. U.S. President Joe Biden’s recent approvals of the Alaska LNG and Willow oil projects have been widely condemned and the United States is still considering approving significant additional support for LNG. 

The text also says that “low-carbon and renewable hydrogen and its derivatives such as ammonia should be developed”, following Japan’s efforts to use its position as G7 host to internationalize its fossil fuel and ammonia heavy energy strategy, called the GX. Japan plans to use ammonia, the production of which relies on fossil fuels, extensively for co-firing in coal power plants and is promoting this technology across Asia. Even if coal and ammonia are burned in equal amounts – an impossible feat with today’s technology – emissions would still be as high as that of gas-fired power stations, which also need to be phased-out rapidly to decarbonize the power sector.

Research shows that the G7 have a lot to win by shifting to clean energy and phasing out fossil fuel reliance. This is not only critical to meet climate targets, but also to permanently bring down soaring energy costs and increase energy security. Renewable energy technologies are already more affordable and can be scaled up more rapidly to respond to short term energy security needs. They also help avoid fiscal instability linked to volatile fossil fuel prices and stranded asset risks as global gas demand drops. 

In response, experts at Oil Change International and Partner organizations in G7 countries issued the following statement: 

Laurie van der Burg, Public Finance Campaign Co-Manager at Oil Change International, said:
“The science is crystal clear that leaving the door open to investments in new gas or LNG leaves the G7 off track for 1.5°C. In addition, the claim that last year’s G7 commitment to end international fossil fuel finance has been met is an outright lie as evidenced by new investments in fossil fuel projects. G7 Leaders must next month fully close the door to investments in new gas and LNG and instead maximize on their opportunity to shift billions in public money out of fossil fuels and into the clean energy solutions that can build a more energy secure, sustainable and affordable future. The UK, Canada and France have shown this can be done, Japan, Germany, Italy and the United States must urgently catch up.”

Susanne Wong, Asia Program Manager at Oil Change International, said:
“This G7 ministerial revealed Japan’s failure of climate leadership at a global level. At a time when we rapidly need to phase out fossil fuels, this year’s G7 host pushed for the expansion of gas and LNG and technologies that would prolong the use of coal. We need Japan to stop prioritizing corporate interests and derailing the transition to clean energy with its dirty energy strategy.”

Lidy Nacpil, Coordinator of the Asian Peoples’ Movement on Debt and Development, said:
“Instead of delivering on climate finance obligations and fulfilling last year’s commitment to end public finance for fossil fuels by the end of 2022, this year’s Japan-led G7 continues its shameful disregard for what people and planet urgently need – a rapid, equitable, and just transition directly to renewable energy systems. Asian communities continue to suffer from the impacts of decades-long fossil fuel projects promoted and financed by Japan, the rest of G7, and the Global North. The worst is yet to come if the G7 insists on its planet-warming people-harming ways.”

Hiroki Osada, Campaigner at Friends of the Earth Japan, said:
“Japan has become both a promise-breaker and Earth-destroyer at the same time by continuing to finance fossil fuel projects overseas. Such dirty projects have also destroyed local communities and the environment, as in the case of Ilijan LNG import terminal in the Philippines. With no time to waste to address climate change, nothing can justify new investment in fossil fuels, and no exceptions can be allowed. Japan should immediately end international financial support to fossil fuels in line with its G7 commitment, and should also commit to a complete phase-out from coal by 2030.”

Louise Burrows, Senior Policy Advisor at E3G in the United Kingdom, said:
“It is concerning to see the G7 claim they have ended international fossil fuel finance, when multiple fossil fuel projects are still being actively pursued by over half the group, and Japan and Germany are yet to adopt new fossil finance policies.  

“To be taken seriously, the G7 must follow the UK’s lead and implement this commitment with integrity. If they stay true to this commitment, the G7 could directly shift over $24 billion a year in public finance out of fossil fuels and into clean energy. This would bring the G7’s clean energy finance to $34 billion annually, a sum almost large enough to close the $36 billion energy access finance gap.  

“The numbers speak for themselves. The G7 are uniquely placed to catalyze a just, transformative, and rapid transition to clean energy globally. They must maximize this opportunity and immediately prioritize all international public support for renewables.”

Simone Ogno, Climate and Finance Campaigner at ReCommon Italy, said:
“The effects of Italy’s non-existent implementation of its stop funding fossils pledge are beginning to reverberate on the international scene, now also with the Japan-led G7 Ministerial. Japan risks being to the Asian continent what Italy will be to Africa because of its prolonged investments in fossil fuels, especially through their export credit agencies: an obstacle to a real and just energy transition away from fossil fuels. This is why we urge that the other G7 members like France and the UK work to bring both governments back on track. This is especially important as Italy is scheduled to host the G7 next year.”

Collin Rees, United States Program Manager at Oil Change International, said:
“Despite G7 ministers’ rhetorical games, new investments in gas and LNG cannot be ‘consistent with our climate objectives’. This is a deadly lie inconsistent with science and justice. 

“Joe Biden’s team signing off on this language rings dangerously hollow just days after he approved a massive LNG project in Alaska that, if built, will devastate communities and the climate for decades. Biden must stand up to Japan’s dirty energy lobby at the G7 and stop doing the gas industry’s bidding at home.”

Gaïa Febvre, International Policy Coordinator Climate Action Network France, said:
“LNG is a dangerous distraction from a just energy transition to renewables and energy savings, which we desperately need. G7 countries must be careful not to let short-term energy supply concerns lock our future into new dirty gas infrastructure and create new dependencies. Instead, they must break free of fossil fuels once and for all. An energy system dominated by fossil fuels is a failure for current and future generations, and for our planet.”

Harjeet Singh, Head of Global Political Strategy, Climate Action Network International
“G7’s addiction to fossil fuels to continue with their unsustainable consumption will have dangerous consequences for people and ecosystems. Every new investment in the planet-heating fossil fuels is a death sentence for the vulnerable communities who are already facing devastating storms, floods and rising seas. The rich industrialised countries are also shirking their responsibilities to provide adequate finance to help poorer nations adapt to and recover from the losses and damages caused by climate disasters.”

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Source: IEA (2023) Outlooks for gas market and investment.

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