G7 makes exception for funding of overseas gas projects

Leaders of the G7 major economies have added a caveat to their commitment to end new direct international public financing for unabated fossil fuels by the end of this year, saying "publicly supported investment in the gas sector can be appropriate" in order to reduce dependency on Russian gas.

The group's climate and environment ministers in May committed to end new direct international public financing for unabated fossil fuels by the end of this year, "except in limited circumstances clearly defined by each country consistent with a 1.5°C warming limit and the goals of the Paris Agreement". The G7 nations are Canada, France, Germany, Italy, Japan, the UK and the US.

The pledge followed a similar commitment made by 39 countries and financial institutions — including Canada, France, Germany, Italy, the UK and US — on the sidelines of the UN Cop 26 climate conference in Glasgow last year, but which Japan had not signed.

In a communique issued today to mark the end of a two-day summit in Germany, the G7 countries said limited circumstances include investments in the LNG and the gas sector in the context of the phase-out of countries' dependency on Russian gas.

"We stress the important role increased deliveries of LNG can play, and acknowledge that investment in this sector is necessary in response to the current crisis," the G7 leaders said.

The communique said "publicly supported investment in the gas sector can be appropriate as a temporary response", but must be consistent with the countries' climate objectives and must avoid "creating lock-in effects".

Environmental campaign group Oil Change International said today's statement is putting at risk the opportunity to shift at least $33bn a year in international fossil fuel investments from the G7 governments towards clean energy. It said renewable energy and efficiency solutions can be deployed faster than new gas projects and better serve energy needs. Clean energy projects do not come with the stranded assets and financial stability risks of fossil gas, it said.

Observers expected commitments to end international financing of unabated fossil fuel projects made by the G7 ministers in May and at Cop 26 last November to take a hit on energy security concerns, especially because of the uncertainty over gas deliveries from Russia.

Soon after the G7 May ministerial meeting, Japan said it could continue financing upstream oil and gas projects despite its G7 pledge, according to Oil Change International. Germany also indicated it would pursue gas projects in Senegal.

By Caroline Varin