Germany and Japan must not Back Away from G7 Agreement to Stop Financing Fossil Fuels

Published on: 23 June 2022
by KnowESG
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It was a significant step forward when the G7 Energy, Climate, and Environment Ministers recently agreed to stop funding foreign fossil fuel projects by the end of 2022. Japan and Germany should work in tandem with others to achieve the commitments.

It means that Japan will now move its public finances to clean energy, joining the other G7 members who have already pledged something similar at the UN climate conference in 2021. This matters a lot. With an annual investment of $11 billion in polluting foreign fossil fuel projects, Japan is the second-largest state financier of fossil fuels.

For the other G7 members, the commitment is also a welcome reaffirmation of the Glasgow promise. We encourage the G7 to uphold the ministerial promise at the meeting next week despite unsettling signs of retreat, primarily from Germany and Japan.

To address the climate catastrophe and provide for the needs of energy security and development, it is essential to prioritise public funding for clean energy and energy efficiency.

The G7 promises to redirect $33 billion annually from fossil fuels to clean energy by upholding its commitment. This would go a long way toward fulfilling the yet unfulfilled goal of investing $100 billion yearly to support climate action in developing countries or at least the mitigation finance portion of it.

As clean energy and energy efficiency solutions offer the best short-and long-term options for creating a more secure, sustainable, and safe future, this transition is also essential to achieving energy security and development goals. The pledge, though, doesn't seem to be finalised just yet.

Recently, there have been hints that some nations may be reversing course by spending money to replace Russian supplies with LNG and gas. According to audio recordings, Chancellor Scholz is passionately interested in pursuing gas ventures in Senegal.

According to G7 negotiators from other G7 nations, Germany even tries to modify the official G7 document in this area, undermining the 1.5C-limit. Despite its G7 commitment, the Japanese government appears to think it can continue funding upstream oil and gas projects.

A weakening of the ministerial promise to transfer finance in the G7 leaders' statement would be particularly embarrassing for Japan as well as for Germany's new government, which is hosting the G7 for the first time.

To ostensibly aid nations in achieving their climate targets and national security, the Japanese government has already played a significant role in watering down the pledge. However, these exceptions would have the exact opposite impact.

To fulfil its promise to stop financing all fossil fuels by the end of this year, Japan will have to take a radical turn.

The development of gas infrastructure in Asia and around the world has been spearheaded by the Japanese government. The Asia Energy Transition Initiative (AETI), which includes $10 billion in financial support to grow LNG consumption in Asia, was launched by Japan in May of last year.

In April, Japan committed to assisting Indonesia in the development of hydrogen, ammonia, and carbon capture for "practical energy transitions." A feasibility study on using ammonia at the Suralaya coal-fired power plant is currently being planned by the Japanese company Mitsubishi Heavy Industries.

This Suralaya complex is close to the contentious Jawa 9 and 10 coal plants, where local populations are already experiencing severe air pollution problems as well as harm to the local fishing sector and the sea.

The plans to export technologies for carbon capture and co-firing ammonia at coal power plants, according to Prime Minister Kishida, are "the key to decarbonising while still using fossil fuels."

Given the erratic gas prices, Japan's sustained support for fossil fuel expansion poses a threat to its economy and energy security. Additionally, it jeopardises the environment and energy security of Asian nations. South and Southeast Asia are home to five of the ten nations with the highest climate risk.

We need the G7 leaders to address the numerous issues we are experiencing related to energy security, climate change, food security, and the conflict in Ukraine when they meet. Plans to improve energy security by concentrating on developing new gas infrastructure are naive.

According to research, it is unnecessary to invest in new LNG infrastructure to replace Russian supplies if enough money is invested in energy efficiency and renewable energy sources, as well as using the current LNG infrastructure. Without the price volatility, stranded asset risks, and time needed to build new fossil fuel infrastructure, clean energy solutions may be implemented swiftly.

Leadership, courage, and vision must be steadfast at this time. No G7 ministerial commitment should be weakened or reduced to another meaningless pledge.

We need the G7 leaders to remain steadfast in their pledge to stop providing public funding for fossil fuels used abroad and to switch investment to sustainable energy.

This will assist in creating the future that we so desperately need—one that is more peaceful, ecological, equitable, and energy secure.

Source: Climate Home News

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