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Underwhelming Progress and Unclear Commitments:
A Critical Look at G7 Ministers' Meeting on Climate, Energy and Environment
Thomas Houlie, G7 Research Group
May 1, 2023
On April 15 and 16, 2023, attention focused on Sapporo, Japan, where the G7 ministers of climate, energy and the environment convened at a critical juncture. They met against the backdrop of the recent publication of the AR6 Synthesis Report by the Intergovernmental Panel on Climate Change (IPCC), which provided a comprehensive assessment of the social, economic and technical aspects of the climate crisis, highlighting the urgency and feasibility of reaching net zero emissions by 2050 and keeping global warming under 1.5°C above pre-industrial levels. The dramatic Russian war of aggression on Ukraine, which began in February 2022, is still causing an unprecedented global energy crisis characterized by high energy prices, market volatility and disruptions to energy supply. The ministerial meeting was thus crucial in ensuring that each G7 member's policies align with its commitments, and that the G7 develop a unified approach to address the challenges posed by the global energy transition.
Over the past few years, G7 members have taken decisive steps to reduce the environmental impact of their power sector. All members except Japan have successfully decreased their reliance on coal for power generation, while actively promoting the deployment of renewable energy infrastructure. The United Kingdom accomplished the fastest fall in coal usage within the G20 and is now betting on its vast offshore wind potential. Italy has also made great progress, reducing its coal usage by 67% between 2015 and 2022, and targeting 70% renewable generation by 2030. Germany continues to pursue its Energiewende policy, which has made it a global energy transition leader with over 46% of renewable power production in 2022. Meanwhile, the United States has set a target of achieving 100% clean energy production by 2035, which would theoretically put the country on track to meet its 1.5°C goal. To support this ambitious target, the US enacted the Inflation Reduction Act, its most comprehensive climate policy with innovative incentives for decarbonizing the power sector. Canada has also adopted an objective to reach 90% of electricity generation from renewable and non-emitting sources by 2030.
G7 members exhibit significant variance in their respective stances on nuclear energy. While Germany recently shut down its last nuclear reactors, France is doubling down on nuclear, with plans to commence operations of six new EPR2 reactors by 2035, as well as to conduct feasibility studies for eight additional reactors and extend the lifetime of its existing fleet. The United Kingdom and Japan have also embarked on ambitious nuclear programs. There is also a divergence of opinions among G7 members regarding the role of hydrogen in their respective energy strategies. While some members have made hydrogen a cornerstone of their energy plans, others have relegated it to a more peripheral role.
Japan, the host of the 2023 G7 Hiroshima Summit, stands out from the other members. Japan has adopted the Green Transformation strategy, which emphasizes the mitigation of the climate impact of fossil fuels and the development of alternative fuels such as ammonia and hydrogen. Currently, over two thirds of Japan's electricity is generated through the use of fossil fuels, which is the highest among all G7 members. Furthermore, Japan has the lowest renewable energy penetration rate among its G7 counterparts.
One of the most significant findings of this IPCC assessment cycle is that "existing projected cumulative future CO2 [carbon dioxide] emissions over the lifetime of existing fossil fuel infrastructure, without additional abatement, exceed the total cumulative net CO2 emissions in pathways that limit warming to 1.5°C." The G7 has pledged to accelerate the phaseout of unabated fossil fuels but have yet to provide a clear target. This statement is in line with the vagueness of the G7 leaders' commitment at their 2022 Elmau Summit to "achieving a predominantly decarbonised power system by 2035."
Given the climate emergency, the statement in the 2023 G7 Climate, Energy and Environment Ministers' communiqué that "investment in the gas sector can be appropriate to help address potential market shortfalls provoked by the crisis" contradicts the stark assessment by the IPCC and falls short of the expectations placed on this meeting. While the ministers have added the caveat that investment should be "implemented in a manner consistent with our climate objectives and without creating lock-in effects," this statement still perpetuates the notion that natural gas can serve as a transition fuel towards decarbonization. This view has been proven to be both inaccurate and harmful.
The International Energy Agency's (IEA) net-zero scenario, cited by the ministers, indicates that "no new oil and natural gas fields are required beyond those already approved for development," while also projecting a sub-2% share of unabated gas in the G7 members' power systems by 2035. Natural gas was the largest source of the increase of greenhouse gases emissions in the last decade and is projected to remain at the top spot for this decade, as its development is now ubiquitous around the globe. IEA analysis has revealed that greenhouse gas emissions from the gas supply chain have been significantly underreported. Natural gas has been called the new coal, and its widespread development across the globe poses a threat to our ability to achieve our climate targets.
During the meeting, G7 ministers agreed to end the construction of new unabated coal-fired power plants. However, Japan was the only G7 member with a coal power project in the pipeline, namely the Matsushima power station. As of April 2023, less than 5% of Japan's operational coal power capacity has a set retirement deadline. It is worth noting that G7 countries account for 15% of global coal power capacity.
The term "unabated" refers to power stations where no greenhouse gas mitigation measures have been implemented. However, the inclusion of this term opens the door for the implementation of carbon capture and storage (CCUS) infrastructure at existing plants. CCUS is still an early-stage technology that has yet to prove its efficiency. For instance, the largest CCUS plant, which captures CO2 from the Gorgon gas field in Western Australia, has consistently failed to meet its sequestration targets.
The G7 environment, climate and energy ministers achieved several outcomes in Sapporo, but much more remains to be done.
During the ministerial meeting, the G7 ministers collectively committed to reaching a target of increasing offshore wind capacity by 150 GW. The United Kingdom alone will account for one quarter of this objective. In addition, the G7 members also committed to achieving a target of 1 TW of photovoltaic capacity by 2030. These commitments represent an important step towards decarbonizing the G7's power systems.
The Sapporo communiqué addresses several critical factors of decarbonization. The ministers recognized the need to develop low-carbon and renewable hydrogen, including for power generation, a reference to Japan's decarbonization strategy. The mention of nuclear power is targeted at countries that "recognize its potential to provide affordable low-carbon energy," a position currently held by most of the G7 members. The ministers also reaffirmed the importance of critical minerals and their supply chains, which was addressed in the new Five-Point Plan for Critical Minerals Security. The plan outlines five enablers for mitigating economic and security within mineral supply chain risks: long-term supply and demand forecasts, responsible development of resources and supply chains, focus and cooperation on recycling, resource-saving measures, and preparedness for supply disruption.
All the dimensions of the ministers' communiqué rely on the ability to channel investments toward clean energies. According to the IEA's net-zero scenario, G7 investments in electricity generation need to triple in the next decade. The IEA World Investment 2023 report, expected in June 2023, will provide a better understanding of the current level of financial commitment from members.
The G7 ministers reiterated their commitment to eliminating inefficient fossil fuel subsidies by 2025, as initially adopted during the G20 2009 Pittsburgh Summit. These subsidies were defined as those that "encourage wasteful consumption, reduce our energy security, impede investment in clean energy sources and undermine efforts to deal with the threat of climate change." However, a universally endorsed definition of what makes a fossil fuel subsidy "inefficient" is still lacking. Fossil fuel subsidies amounted to 6.8% of the global gross domestic product in 2020, and the International Monetary Fund predicts this share will increase to 7.4% by 2025.
Climate finance is a crucial element in the transition to a sustainable future, as emphasized by developing countries for decades at the Conference of Parties (COP) to the United Nations Framework Convention on Climate Change. However, G7 members have fallen short in this regard, with their climate finance actions ranging from critically insufficient to insufficient, according to the Climate Action Tracker, compared to their fair share. The Just Energy Transition Partnership between Indonesia and the G7, Denmark and Norway, announced during the G20 2022 Bali Summit, indicates that the G7 can effectively drive the energy transition worldwide, even if the implementation details have yet to be unveiled.
Despite some positive developments at Sapporo, such as the collective renewable deployment target and the preparation of a shared critical mineral strategy, G7 ministers of climate, energy and environment made underwhelming progress, possibly due to the outlier situation of Japan as host. The window for climate action is closing, so the upcoming G7 Hiroshima Summit in May, the G20 summit in New Delhi in September and the 28th COP meeting in the United Arab Emirates in November and December will be crucial for the climate transition.
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Thomas Houlie is a compliance director for the G7 Research Group, coordinating research on energy supply and power sector decarbonization policies. He is working as policy analyst for the climate science research institute Climate Analytics, where he focuses on climate and energy policy in Australia and the Asia-Pacific region.
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