CSOs Condemn G7 Leaders for Dangerous Backsliding on Gas, Breaching Commitments to End Fossil Fuel Finance

Today, G7 Leaders in Hiroshima concluded that there is “an important role” for “increased deliveries of LNG” and that “publicly supported gas investments can be appropriate”, jeopardizing the 1.5ºC warming limit and directly contradicting last year’s G7 commitment to end international public finance for fossil fuels by the end of 2022.

The G7 endorsement of increased gas finance comes despite strong opposition. Leading up to the Summit, activists organized over 50 actions in 22 countries to urge Japan and fellow G7 countries to end their support for fossil fuels and to stop driving the expansion of gas and other fossil-based technologies such as ammonia co-firing in coal-fired power plants. They say the science is clear: ending investments in fossil fuels and phasing them out is necessary to avoid climate breakdown and meet parallel energy security and affordability goals.

In their Leaders’ Communique, the G7 claim that “they are steadfast in their commitment to … keeping a limit of 1.5ºC global temperature rise within reach”. A true commitment to 1.5°C, however, requires the G7 to explicitly exclude continued investments in new upstream gas projects and Liquefied Natural Gas (LNG) infrastructure. Today’s G7 endorsement of increased gas investments came after a push from Japan and Germany, with Japan using its G7 Presidency to also promote other fossil fuel-based technologies such as hydrogen, ammonia and CCS.

The G7 play a central role in enabling the global buildout of LNG infrastructure. An Oil Change Internationalbriefing shows that 61% of LNG export terminal capacity built in the last decade had international public finance from the G7. A large portion of the G7’s fossil fuel finance went to support gas projects (42%), of which 75% went to support LNG projects, with Japan and the United States providing the majority of LNG finance.

According to the International Energy Agency (IEA), maintaining a 50% chance to limit global warming to 1.5°C requires an immediate end to investments not just in new coal, oil, and gas production, but also in LNG infrastructure. Such investments also come with serious stranded assets risks as gas demand, including for LNG, is forecasted to drop. These findings remain unchanged in the context of the war in Ukraine and its impact on global energy markets.

Reducing soaring energy costs and improving energy security requires phasing out fossil fuel reliance and shifting to clean energy, according to the IEA. Renewable energy technologies are more affordable, and can be scaled up more rapidly. They also help avoid fiscal instability linked to volatile fossil fuel prices and stranded asset risks as global gas demand drops. Today, the G7 failed to reap these benefits of an accelerated shift to clean energy.

Leaving the door open for new gas and LNG infrastructure is also in direct contradiction to last year’s G7 commitment to end international public finance for fossil fuels by the end of 2022 “except in limited circumstances … consistent with a 1.5°C warming limit…”. Today, G7 Leaders claim that they have fulfilled this commitment. However, data shows this is untrue, as Japan and Italy have continued to approve new international support to fossil fuel projects in 2023 that are not aligned with 1.5°C.

This year, Italy has already approved international public financing for the Santos Basin oil and gas production project in Brazil. The Japanese Export Credit Agency, JBIC, has provided USD 393 million for a gas-fired power plant (Syr Darya II Shirin combined cycle gas turbine (CCGT)) in Uzbekistan. During a recent visit to Mozambique, as part of Japan’s efforts to “deepen its involvement with the global south”, Prime Minister Kishida committed to help Mozambique revive its LNG project and support Japanese private investment in gas. 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.

Had the G7 upheld their climate and fossil finance commitments, the group of nations could have collectively shifted over USD 24.3 billion per year out of fossil fuels and into clean energy and increased G7 clean energy finance to USD 34 billion annually, a sum nearly substantial enough to close the energy access finance gap. This would have catalyzed an even larger shift in public and private finance and further investments are needed for the G7 to deliver their fair share of climate, loss and damage and just energy transition finance support to the Global South.

Today, the G7 missed an opportunity to set the stage for success at key upcoming global climate events, including the UN Climate Action Summit in September and COP28 in December. World leaders must urgently change course to not forfeit the chance to limit global warming to 1.5°C while building a more energy secure and affordable future.

In response, experts at Oil Change International and partner organizations issued the following statements:

“This year’s G7 is revealing Japan’s failure of climate leadership at a global level. At a time when we rapidly need to phase out fossil fuels, this year’s G7 host has pushed for the expansion of gas and LNG and technologies that would prolong the use of coal. Activists mobilized 50 actions across 22 countries this week to demand that Japan end its fossil fuel finance and stop driving the expansion of gas and other fossil-based technologies. Japan will continue to face intense international scrutiny until it stops fueling the climate crisis,” said Susanne Wong, Asia Program Manager at Oil Change International.

“A month ago G7 ministers successfully pushed back against a Japan-led push for gas investments and fossil fuels. But Germany joining Japan in promoting gas investments means we now have a disastrous G7 Summit outcome. The repeated call for public gas investments directly contradicts the G7 Leaders’ claim that they have fulfilled their commitment to end public finance for fossil fuels by the end of last year. It also jeopardizes 1.5ºC and energy security goals. The G7 today missed an important opportunity to get on track for 1.5°C to set the stage for a successful G20 and COP28 — rather they have moved in the opposite direction. They need to urgently reroute to protect people and the planet,” said Laurie van der Burg, Global Public Finance Co-Manager at Oil Change International.

“Japan has used the G7 presidency to derail the global energy transition. Japan has been driving the push to increase gas investments and has been promoting its so-called ‘Green Transformation’ strategy. This greenwashing scheme includes fossil hydrogen, ammonia, CCS, and nuclear, 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 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.

“Last year, Germany led G7 discussions that secured a ground-breaking commitment to end international public finance for fossil fuels by the end of 2022. However, the G7’s continued approval for public investment in the gas sector, led by Germany and Japan, is in direct breach of that commitment and severely undermines progress made on this agenda. The immediate energy crisis has passed and G7 leaders have failed to act in accordance with clear market signals and climate science that new investments in fossil fuels are no longer needed. What is needed is a prioritisation of public investment in clean energy, that will help prevent fiscal instability and reduce stranded asset risks, especially as global gas demand will continue to drop. This is critical not only to meet climate targets but also to bring down energy costs and managing energy security,” said Louise Burrows, Energy Finance Lead at E3G.

“The endorsement of increased LNG deliveries and investment in gas in the G7 communique is no mere backsliding — it is a death sentence being dealt by the G7 to the 1.5°C limit and, in consequence, to the climate survival of vulnerable peoples in the Philippines, Southeast Asia, and across the world. Unless they genuinely put forward the phase out of all fossil fuels, Japan and all G7 nations spout nothing but lies when they say they have aligned to 1.5°C. They cannot claim to be promoting development while subjecting our people to decades more of pollution and soaring energy prices. We reject this notion of a development powered by fossil fuels. In the aftermath of the G7 Summit and lead up to this year’s COP, Japan and G7 leaders should already be warned that civic movements will not tire in pushing back against fossil fuels and false solutions and in demanding a renewable energy transition,” said Gerry Arances, Executive Director at Center for Energy, Ecology, and Development (Philippines).

“Where there was an opportunity to accelerate a renewable energy transition that would bring about energy security, accessibility, and keep us on track to meet climate targets, the G7 have chosen to remain on a fossil-fuelled collision course. Despite a week of sustained global calls from civil society, G7 leaders have let down their constituents on the frontlines. The final G7 communiqué does not heed the bold calls needed for our times and fails to include concrete plans to end the fossil fuel era. Instead of taking decisive action to tackle cost of living, energy, and climate crises, the text plays around the edges,” said May Boeve, Executive Director at 350.org.

“The G7 leaders’ communiqué shows a serious disconnect with science, as it enables new investment in fossil gas infrastructure, despite the very clear messages from both the International Energy Agency and Intergovernmental Panel on Climate Change, which show that a future below 1.5 degrees can’t include more fossil fuels. Most likely, the German chancellor Olaf Scholz has been a driving force behind the weak language on gas, which is a serious blow to Germany’s international credibility on climate,” said Petter Lydén, Head of International Climate Policy at Germanwatch.

“The G7, among the richest nations in the world, have once again proved to be poor leaders on climate with their statement from the Hiroshima Summit. Emphasising the need to keep global warming below 1.5ºC while at the same time committing to continue to invest in gas and LNG shows a bizarre political disconnect from science and a complete disregard for the severity of the climate emergency. This continued hypocrisy from historical polluters as climate impacts continue to increase sets a low bar and jeopardises global efforts to fight the climate crisis. The G7 countries must come to COP28 with a clear focus on doing their fair share on phasing out fossil fuels and delivering climate finance,” said Harjeet Singh, Head of Global Political Strategy at Climate Action Network.

“The G7 energy outcome correctly diagnoses a short-term need for energy security, then promotes a dangerous and inappropriate lock-in of fossil gas that would do nothing to address this need. Energy security can only be achieved by rapidly and equitably phasing out fossil fuels and transitioning to renewable energy, not locking in deadly fossil fuels and lining the pockets of oil and gas executives. This betrayal continues a disturbing turn by President Biden and Chancellor Scholz from rhetorically committing to climate leadership to openly boosting fossil fuel expansion. History will not look kindly on world leaders who accelerate the pace of fossil fuel buildout in the face of worsening climate crisis,” said Collin Rees, United States Program Manager at Oil Change International.