Japan’s G7 Presidency Threatens Progress to End Fossil Fuel Financing

FOR IMMEDIATE RELEASE

April 11, 2023

Contact:
Valentina Stackl, Oil Change International Media Officer, +1 (734) 276 6260, valentina@priceofoil.org

While France, the UK, and Canada take steps to fulfill G7 commitments, Japan pushes for fossil fuel expansion across Asia with new fossil fuel energy strategy
WASHINGTON, DC — As G7 Climate, Energy and Environment Ministers prepare to meet in Japan this weekend, two new briefings launched today, Oil Change International’s Japan’s Toxic Energy Strategy for Asia and G7 Countries can Shift Billions into Clean Energy in collaboration with E3G, show the extent to which G7 countries are succeeding, and failing, in holding up their climate and energy security commitments. 

Last year the G7 committed to “end new direct public support for the international unabated fossil fuel energy sector by the end of 2022.” At this year’s G7, Japanese Prime Minister Fumio Kishida is undermining this commitment by spearheading a new “Green Transformation” policy that would expand fossil fuels across Asia under the guise of “decarbonization,” including through public finance backing. Japan’s greenwashed strategy relies heavily on fossil fuel technologies, including LNG, co-firing of ammonia at coal power plants, fossil hydrogen, and carbon capture, utilization and storage (CCUS). Rather than helping to accelerate the clean energy transition, these technologies typically serve to extend the lifetime of fossil fuel infrastructure, worsen the climate crisis, and undermine energy security.

In the lead up to the G7 Climate, Energy, and Environment Ministerial, other G7 member governments are pushing back against Japan’s efforts to leverage its presidency to promote LNG and other fossil-based technologies. Officials from the UK and US governments are calling for a clear deadline for coal phase out and more ambitious plans to eliminate the use of fossil fuels in the power sector.

Today’s newly published OCI data shows it is critical that G7 members reiterate and strengthen last year’s commitment to end international public finance for fossil fuels, which had end of 2022 deadline. The OCI and E3G briefing shows that though the deadline has now passed, Japan, Italy, and Germany have not delivered on implementation of the commitment, while Canada, the United Kingdom, and France have. Recent G7 public finance flows underscore the significance of last year’s commitment. G7 public finance for fossil fuels between 2020 and 2022 totalled at least USD 73 billion, almost 2.6 times more than their clean energy support over the same period (USD 28.6 billion).

Through upholding and strengthening last year’s commitments, the G7 can prevent backsliding and directly shift USD 24.3 billion a year in public finance out of fossil fuels and into clean energy. This would bring the G7’s clean energy finance to USD 34 billion annually, a sum almost large enough to close the USD 36 billion energy access finance gap. Making this shift would also catalyze an even larger shift in public and private finance.

Quotes

Makiko Arima, Japan Finance Campaigner, Oil Change International: 

“Japan’s toxic energy strategy is derailing Asia’s energy transition. The “Green Transformation” policy is just a euphemism for technologies that prolong the use of fossil fuels, and Japan is pushing hard to promote these technologies in South and Southeast Asia. As the host of this year’s G7, it is Japan’s responsibility to act now and transition towards cleaner and more sustainable energy sources, not hide behind greenwashed fossil fuels. Japan must change course and not hold back the rest of the G7 nations in this crucial fight against climate change.

“Along with being critical to meet climate targets, shifting to clean energy and phasing out fossil fuel reliance is also the best way to permanently bring down soaring energy costs and increase energy security. These technologies are more affordable, can be scaled up more rapidly, and do not introduce further volatility through increased climate damages, fiscal instability, and stranded asset risks as global gas demand drops.

Laurie van der Burg, Campaign Manager Global Public Finance, Oil Change International:

“Last year, the G7 made a groundbreaking commitment  to end international public finance for fossil fuels by the end of 2022 and instead prioritize finance for clean energy. While Canada, France and the United Kingdom have implemented this commitment, Japan, Italy and Germany have failed to deliver. This underlines that it is critical that the G7 reiterate and strengthen last year’s commitment. By doing so they can increase their clean energy finance to USD 34 billion a year, a sum almost big enough to close the energy access financing gap. This is critical not only to meet climate targets but also to bring down soaring energy costs and increase energy security. 

“Shifting to clean energy while avoiding extending the lifetime of fossil fuels assets with fossil-fuel based technologies, including ammonia and hydrogen, is needed to align with 1.5C, prevent fiscal instability and reduce stranded asset risks as global gas demand drops.”

Louise Burrows, Senior Policy Advisor for Energy Finance, E3G:

“Future prosperity lies in the clean energy transition. It is critical that G7 countries fulfill their commitment to end international fossil fuel finance and instead rapidly support sectors and technologies of the future, not the past.

“The G7’s public finance institutions are uniquely placed to catalyze a just, transformative, and rapid transition to clean energy globally. They must grasp this opportunity and showcase leadership and action. Doing so will also help send the right political signals on the phase-out of all fossil fuels.“

Key facts from briefings: