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The G7 wants to dump natural gas … but not yet

Investments in fossil fuels have to be stamped out, except when they help Europe end its catastrophic dependence on Russian gas.

That was the mixed message Friday from climate ministers of the world’s top industrialized democracies. The G7 called for an end to international investments in fossil fuels by the end of this year and slammed private finance for continuing to back dirty energy — but left a big out for EU countries desperate to replace Russian gas.

“We acknowledge that investment in [the liquefied natural gas] sector is necessary in response to the current crisis, in a manner consistent with our climate objectives and without creating lock-in effects,” the ministers said.

Germany’s Economy and Climate Minister Robert Habeck said at a press conference immediately after the three-day meeting concluded in Berlin that the bloc’s “short-term efforts to replace Russian gas are not unsuccessful.” But he added a warning: “We have to be careful not to be too successful because we don’t want to spend the next 30 or 40 years building up a gas industry across the world that, in the end, we don’t want.”

That’s the worry of climate campaigners, who argue that investments in pipelines and terminals will prolong the use of the fuel, which is a major contributor to climate change.

Brussels argues that infrastructure will transport hydrogen in the future — although the EU’s Agency for the Cooperation of Energy Regulators says that’s no certainty.

The pressure to leave an opening for gas also comes from producing countries, which see Europe’s impending disconnection from Russia as a business opportunity.

The U.S has committed to ramping up European gas deliveries. During the meeting, Canada’s Natural Resources Minister Jonathan Wilkinson told Bloomberg that his country could convert an import terminal into an export one and be sending gas to Europe within three years. 

African countries have also seen the chance to cash in; Italy’s Prime Minister Mario Draghi and German Chancellor Olaf Scholz have courted governments and companies across the continent for gas deals.

“The biggest risk is a new wave of expansion of gas production and infrastructure in the African continent incompatible with keeping [the 1.5-degree target of the Paris Agreement] alive,” said Luca Bergamaschi, director of Italian think tank ECCO.

The hunt for gas sits uneasily with the G7’s agreement Friday to shut down public financing of fossil fuels internationally “except in limited circumstances” and their “concern” at “the scale of private finance currently still supporting non-Paris [Agreement] aligned activities especially in the fossil fuel sector.”

Confused communications

A similar tension played out as ministers agreed on a new push to end fossil fuel subsidies by 2025, including publishing “joint public inventories as soon as possible.” But the communiqué also acknowledged that many countries are taking short-term measures in response to high prices that effectively make fossil fuels cheaper — such as the U.K.’s announcement on Thursday of tax relief for oil and gas extraction. The ministers said those policies should be “temporary and targeted.”

With the short term looking complicated, ministers tried to send a message that firmed up their longer-term commitments by pledging to have “predominantly decarbonised electricity sectors by 2035.” That’s a notable shift for Japan, which had declined attempts last year to set a hard date.

But they could not agree to phase out coal power by 2030 — with resistance coming from Japan and the U.S., according to people familiar with the discussions. They also balked at setting a date to stop making and selling fossil fuel-powered cars. G7 leaders may address those issues when they meet in late June.

The ministers also struggled to send a message to the rest of the world that the wealthiest countries on the planet would have their backs as the storms, droughts and heat waves fueled by climate change worsen.

They pledged “enhanced support” to vulnerable countries they acknowledged were already sustaining loss and damage from climate change — a term describing economic and social costs, like territory lost to sea-level rise or infrastructure destroyed by extreme weather.

It’s a significant step for the world’s richest and historically most polluting countries, which have long sought to avoid the issue over fears that it would open the door to costly claims of compensation from island nations and others at high risk of devastating climate impacts. 

But there was no mention of loss and damage financing, a core demand of climate-vulnerable countries set to be a major talking point at the COP27 climate talks later this year. 

Funding is a red line for many wealthy countries.

“I cannot in good conscience put Canadian taxpayers at liability risks that could be limitless,” Canadian Climate Minister Steven Guilbeault told national media this week. A middle ground, he suggested, could be to “shift the conversation away from liabilities” toward “a new way of doing international development.” 

But as ministers also acknowledged in their communiqué that “climate-resilient development” was already challenging and “may not be possible in some regions if global warming exceeds 2C.”

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