G7 leaders risk dangerous backsliding on fossil gas investments at upcoming G7 Summit

FOR IMMEDIATE RELEASE

16 May 2023

Contact:
Valentina Stackl, valentina@priceofoil.org (ET)
Nicole Rodel, nicole@priceofoil.org (CET)

G7 leaders risk dangerous backsliding on fossil gas investments at upcoming G7 Summit
This weekend G7 leaders will meet in Hiroshima, a month after G7 ministers left the door open to new gas investments, falsely claiming to have ended fossil fuel finance. Civil society organizations in Japan and around the world are urging G7 countries to hold fast against pro-fossil fuel language in the outcome of the Leaders Summit, and instead reaffirm and strengthen the 2022 commitment to end international public finance for fossil fuels and shift this public money to clean energy. 

Japan has recently been criticized by fellow G7 members for using its role as host to promote its fossil fuel-heavy energy strategy across Asia and worldwide. Just prior to this weekend’s G7 Leaders Summit, Japan’s Prime Minister, Fumio Kishida toured four African countries, with the intent for the G7 to deepen its ties in the region “by focusing on investing in people and the quality of growth”, while encouraging Japanese companies to increase investment in liquified natural gas (LNG) in Mozambique.

In addition, there are signals of dangerous backsliding by other G7 countries.  Germany recently got exposed for pushing fellow G7 members to endorse public investments in gas, a demand already rejected by the UK and France and the US last week broke its commitment to end international public finance for fossil fuels. The United States Export Import Bank (U.S. EXIM) voted to provide almost USD 100 million in export support to expand the controversial PT Kilang Pertamina Balikpapan Petroleum Refinery in Indonesia. 

Last month G7 ministers succeeded in pushing back against Japan’s attempts to reach agreement that there is “a need for investments in natural gas and LNG” and added caveats requiring any gas investments to be consistent with climate objectives. The ministers also said they are “steadfast in their commitment to the Paris Agreement, keeping a limit of 1.5°C global temperature rise within reach…” A true commitment to 1.5°C stipulates that the G7 should explicitly rule out any investments in new gas supply or LNG infrastructure at the upcoming G7 Summit, as follows from the International Energy Agency’s (IEA) 1.5°C scenario. According to IEA and IPCC scenarios, maintaining a 50% chance to limit global warming to 1.5°C requires an immediate end to investments in new coal, oil and gas production and LNG infrastructure. Such investments also come with serious stranded assets risks; even in IEA scenarios that do not align with 1.5°C, gas demand is forecasted to drop. 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. 

Continued gas investments also directly contradict last year’s groundbreaking G7 commitment to end international public finance for fossil fuels by the end of 2022. Oil Change International 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. While G7 ministers last month claimed they have met the commitment to end their international fossil fuel finance, OCI analysis shows this is false. The United Kingdom, Canada, and France have put a halt to their international fossil fuel finance, but Japan and Italy have approved new investments in fossil fuels in 2023, while Germany has failed to implement its commitment and is pushing for gas investments. The United States has reportedly adopted guidelines to restrict fossil fuel finance, but has not made these public. In addition to the aforementioned support for the Indonesian oil refinery, 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. 

International civil society organizations, notably in Africa, Asia and the US, are strongly urging G7 Leaders ahead of this weekend’s summit to fully close the door to investments in new oil and gas production and LNG infrastructure 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. About 40 actions are planned in 20 countries including Bangladesh, Pakistan, Philippines, United States and Ukraine as part of a global week of action to pressure Japan to stop driving gas expansion and promoting fossil-based technologies like ammonia co-firing at coal plants. This includes a colorful action in Hiroshima on May 18.

The G7 have a lot to win by shifting public money to clean energy and phasing out fossil fuel reliance. Through upholding their commitment to end international fossil fuel finance, the G7 can collectively shift over USD 24.3 billion per year out of fossil fuels and into clean energy. This can increase G7 clean energy finance to USD 34 billion annually, a sum almost big enough to close the energy access finance gap, estimated at USD 36 billion per year. 

This shift is not only critical to meet climate targets, but also to permanently bring down soaring energy costs amid the ongoing energy and cost of living crises, 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 statements: 

“Activists are mobilizing across 20 countries for a global week of action to stop Japan’s dirty energy strategy and expose Japan’s dirty G7 presidency. Prime Minister Kishida is using Japan’s G7 presidency to benefit Japanese corporate interests over the health and security of people and our planet. Japan must stop derailing the global energy transition by pushing for the expansion of fossil gas and other dirty fossil-based technologies. Prime Minister Kishida and other G7 leaders must uphold and strengthen their commitment to end public finance for all fossil fuels and shift investment to renewable energy. This is the surest path to peace and security,” said Susanne Wong, Asia Program Manager at Oil Change International.

“While just a month ago we saw G7 countries successfully pushing back against a Japan-led push for gas investments and fossil fuels, we now see Germany pushing the G7 to endorse gas investments and the United States approving financing for an oil refinery in Indonesia. This directly contradicts last month’s G7 Minister’s claim that they have fulfilled their G7 commitment to end public finance for fossil fuels. It also jeopardizes 1.5°C and energy security goals. We cannot afford backsliding and the G7 must urgently get on track for 1.5°C. This means closing the door to gas investments and instead providing their fair share of climate, loss & damage and just transition finance,” said Laurie van der Burg, Global Public Finance Co-Manager at Oil Change International.

“The G7 must commit to providing a clear pathway for the phasing out of all fossil fuels and the immediate termination on any further expansion of production domestically and abroad.  The G7 Hiroshima Summit will help set the tone for COP28 and we expect the outcome of this summit to be more ambitious, both in terms of actions to reduce emissions as well as delivering the financial support needed by developing countries to address the climate emergency. Vulnerable countries and communities in the Global South are experiencing increasingly devastating climate impacts and any lack of real action or delay from G7 nations will have severe consequences to life and livelihoods,” said Tasneem Essop, Executive Director at Climate Action Network International.  

“The G7 is an important opportunity for our leaders to send a clear message on the fair and equitable phase out of fossil fuels that will resonate until COP28. Coherence and ambition are expected from France, which will host the Summit on the New Global Financial Pact in June. France has chosen to assume a leadership role and it is essential that it honors its commitments, especially when it comes to restoring trust between the countries of the North and the South,” said Gaïa Febvre, International Policy Coordinator at Réseau Action Climat France.

“The G7 leader’s summit in Hiroshima represents a crucial juncture at which the world’s most powerful nations have the opportunity to demonstrate true leadership and make good on their promises. There is no point powering up on renewables without powering down on fossil fuels — a commitment to expand renewable energy development is not enough. At a time when the climate, energy insecurity, and cost of living crisis are more potent than ever, we are demanding the G7 communique include a clear timeline for a complete fossil fuel phase out along with financial and technical support to accelerate a just, global energy transition,” said May Boeve, Executive Director at 350.org.

“Germany must push for a strong consensus in the G7 to stop international finance for fossil fuels. Expansion of production, new infrastructure and any activities that increase the demand for natural gas are fundamentally incompatible with the Paris Agreement. To secure domestic energy supply, Germany does not need additional infrastructure for fossil fuels — it should now join other G7 countries to send a strong signal that the fossil fuel era is over and global efforts should be focused on achieving a full energy transition as quickly as possible,” said Anja Gebel, Policy Advisor at Germanwatch.

“What will emerge from the G7 will also strongly influence the decisions taken during the upcoming COP28. For this reason, it is necessary for member countries to rise to the challenges of the consequences of the climate crisis we are experiencing, and to stop international public financing of fossil fuels. Italy will preside over its 50th summit in 2024, a pivotal moment: for this reason, it is crucial that it reviews its international commitments, starting with the so far poor implementation of the Clean Energy Transition Partnership launched at COP26,” said Simone Ogno, Finance and Climate Campaigner at ReCommon (Italy).

“Japan is using its G7 presidency to promote its so-called “Green Transformation” strategy. This greenwashing scheme includes fossil hydrogen, ammonia, CCS and nuclear, and technologies which will delay the urgently needed just energy transition. Japan and G7 governments must accelerate fossil fuel phase out, not prolong the life of fossil fuel infrastructure. Japan, as G7 President, must commit to a full fossil fuel phase out and stop blocking efforts to phase out coal and fossil fuels at the G7,” said Ayumi Fukakusa, Deputy Executive Director at Friends of the Earth Japan.

“The G7 must reject fossil fuels and false solutions to the climate crisis. Given the scale of the crisis confirmed in the IPCC sixth assessment report this year, and felt on the ground in vulnerable communities everywhere, it is essential that the G7 fully commit to ending international public finance for fossil fuels and supporting a rapid scale up of public finance for renewable energy transformation that benefits people,” said Sara Shaw, Climate Justice & Energy Program Coordinator at Friends of the Earth International.

“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,” said Louise Burrows, Senior Policy Advisor at E3G in the United Kingdom.

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