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The G7 nations' call for "an absolute end" to coal-fired power
generation financing by the end of 2021 is seen as a positive step
and yet "a missed opportunity" by climate advocates who have been
pushing for a complete halt to backing for all fossil fuel
projects.
In a joint communique released 21
May, environment ministers from Canada, France, Germany, Italy,
Japan, the UK, and the US recognized coal power generation as "the
single biggest cause of temperature increases," and that global
investment in "unabated coal power generation is incompatible" with
the 2015 Paris Agreement goal to limit global warming to within 1.5
degrees Celsius of pre-industrial levels.
"We stress that international investments in unabated coal must
stop now and commit to take concrete steps towards an absolute end
to new direct government support for unabated international thermal
coal power generation by the end of 2021, including through
official development assistance, export finance, investment, and
financial and trade promotion support," the ministers wrote at the
conclusion of their virtual summit, which was held 20 and 21
May.
Runup to G7 and UN COP26 meetings
The ministers' announcement presages next month's full G7
meeting in Cornwall, England, and the determination of the US and
UK to secure ambitious climate goals ahead of the UN COP26 meeting
on climate to be held this November in Glasgow, Scotland.
US President Joe Biden released the nation's first-ever international climate financing
plan on 22 April that directed the Department of the Treasury
to take steps to end overseas financing of fossil fuel projects,
but lacked a deadline. The agreement now commits the US to end its
overseas financing starting in 2022.
The G7 communique is the first-ever acknowledgement of coal's
role in exacerbating global climate change by G7 ministers, and it
came a few days after the International Energy Agency (IEA) released its Net Zero 2050 Roadmap, which
made waves in calling for an end--for the first time--to approvals
of all new coal-fired projects, coal mines, and new oil and natural
gas fields by the year's end. It also called for the phasing out of
all coal-fired power projects by 2040 unless equipped with carbon
capture and storage, starting with the least efficient plants by
2030.
G7 falls short
The G7 communique, however, didn't go as far as the IEA roadmap.
It stopped at just ending financing for overseas coal-fired
generation and called on member countries to phase out direct
support for fossil fuel-fired generation without providing a
timeline. The G7 ministerial agreement also gave member countries
the discretion to opt out under "limited circumstances."
The agreement, however, didn't spell out the "limited
circumstances," except to say that countries could exercise this
discretion as long as it was "in a manner that is consistent with
an ambitious, clearly defined pathway towards climate neutrality in
order to keep 1.5°C within reach, in line with the long-term
objectives of the Paris Agreement and best available science."
This loophole drew the ire of Friends of the Earth (FOE) US,
with the nonprofit describing the communique as being "long on
words, but short on substance."
"While the communique touched on the need to end international
support for fossil fuels and fossil fuel subsidies, it so caveats
the language, to render it useless. There is no mention of gas -
merely an unclear reference to 'carbon intensive' fossil fuels with
an unexplained allowance for exceptions," Kate De Angelis, FOE US
international climate finance manager , wrote in a 24 May email to
IHS Markit.
Existing fossil fuel projects unaffected
What's more, De Angelis said, the communique fails to address
the billions in existing support for fossil fuels and indirect
support through financial intermediaries.
Earlier in May, various chapters of FOE joined forces with the
nonprofit Oil Change International in warning a number of
countries--including the US, UK, Australia, and Japan and their
export credit agencies--about the dangers of continuing to support
fossil fuel projects in violation of the Paris Agreement.
In a 4 May letter to the Japan Bank for International
Cooperation (JBIC) and Nippon Export and Investment Insurance
(NEXI), OCI expressed its ongoing concern for its continued fossil
fuel support. While the letter did not reference specific projects,
JBIC announced a $53 million loan for a coking coal mine project by
Sojitz Corporation, a Japanese firm, in Australia on 1 April, and
in March the bank signed off on a $56 million loan for the Longview
coking coal project in West Virginia.
FOE England, Wales, and Northern Ireland (EWNI) has been
successful in persuading the country's High Court to hear arguments
against UK Export Finance, a government body, for its ongoing
support for the $20 billion Mozambique LNG project under development by
TOTAL, despite a March policy blocking such financing activity. And
The Export-Import Bank (EXIM) of the US also has been cautioned
against its support for the Mozambique project by FOE US especially
since TOTAL has declared force majeure on the
project.
The rush to end backing for gas-fired projects was criticized a
week earlier by Nigerian Vice President Oluyemi Osinbajo who spoke at a Columbia Global
Energy Summit on 18 May. Osinbajo said the ambitions of developing
countries are being thwarted by Western nations hobbling
energy-poor countries' ability to find backing for gas-fired power
plants and gas-powered vehicle schemes that could bolster
electrification rates, reduce petroleum product use and imports,
and slow global warming.
Glass half full
The International Institute for Energy Economics and Financial
Analysis also noticed the absence of any language aimed at
targeting existing financing of fossil fuel projects though the
nonprofit energy think tank preferred to view the G7 communique as
a glass half full, calling it "simultaneously an important step
forward and a missed opportunity."
"[The communique] recognizes the reality that new coal financing
must end very quickly if the world is to avoid the worst effects of
climate change," Clark Williams-Derry, IEEFA's energy finance
analyst, wrote in a 24 May email to IHS Markit. "Yet it ignores the
climate risks posed both by the oil and gas industry, and by the
coal projects that have already been approved."
"If G7 countries are serious about addressing climate change,
they will have to do a lot better with an immediate end to all
international support for fossil fuels, including gas and other
fossil fuel subsidies," FOE's De Angelis said in far more blunt
terms than the UN Secretary General António
Guterres, who welcomed the G7 ministerial
agreement and urged the countries to shift financing to
renewables.
IEA Executive Director Fatih Birol also was pleased that the G7
ministers had chosen to use its roadmap to guide their
communique.
In a 21 May tweet, Dave Jones, senior electricity analyst for
the UK-based nonprofit Ember, also lauded the G7 ministers for
taking the cue from the IEA Net Zero Roadmap deadline for
coal-fired generation.
"But the G7 climate ministers have stopped short of two other
necessary actions: phasing out coal by 2030, and achieving clean
power by 2035," Jones rued in that tweet.
Posted 25 May 2021 by Amena Saiyid, Senior Climate and Energy Research Analyst
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