The agreement reached by Ministers of the world’s largest economies could see $33bn per year being transferred to clean energy sources
The world’s largest economies have decided to cease funding fossil fuel development overseas by the end of 2022. This will likely stop some of the investment in carbon bombs that threaten efforts to reach the world’s climate goals.
Analysts estimate that the agreement could shift $33bn (PS26bn annually) from fossil fuels to clean energy sources.
At a Friday meeting in Berlin, the energy and environment ministers of all G7 countries agreed to stop taxpayer funding for overseas oil, gas, and coal projects. Japan, which resisted such a pledge at last year’s
Cop26 climate summit was joined by the UK, Canada, France, and Italy, France, and this year’s host nation is Germany.
Alok Sharma, British President of Cop26, said that the
the commitment demonstrated that in the context of the Ukraine War and the high prices for fossil fuels, the transition to clean energy is more urgent than ever.
“We believe that climate and environment security can be synonymous with national security and power.” The solution to the current climate and global energy crises must be identical. It is about managing our dependence on fossil fuels.
Laurie van der Burg is a campaign manager at Oil Change International. She said that the G7’s pledge to end public finance for fossil fuels was a significant win. This is an important confirmation in the context of the Ukraine conflict that the best way to energy security is through clean energy financing. These promises must be fulfilled immediately.
Existing projects may be exempt from the new commitment. This means that many of the “carbon bombs,” i.e., new oil and gas projects in the world, if completed, will end any chance of global warming being less than 1.5C, as the Guardian discovered in a recent investigation that they could still be eligible to receive public funding.
The Guardian discovered nearly 200 carbon bombs. About 60% of them are in use and have begun pumping.
Most of their funding will likely come from private or government sources outside the G7. However, overseas public sector finance may be a powerful catalyst for new oil-and-gas projects because it offers reassurance for private and developing country investors.
The G7 communique failed to address domestic public sector financing for fossil fuels. Some member countries continue to subsidize fossil fuels and offer substantial tax breaks.
The UK announced Thursday, a windfall tax for fossil fuel companies. It includes a loophole that allows them to avoid 90% of the levy if the company invests in new oil or gas production in the North Sea. This is despite the UK’s carbon budget. Critics argued that this would not solve short-term supply problems as new exploration sites take decades to operational. They also claimed that the levy amounts to a subsidy of billions of pounds to new oil and gas production in the North Sea.
The G7 pledged to stop overseas coal financing last year, and some members also agreed to stop all foreign fossil fuel financing.
However, this is the first time all seven countries have agreed to cover all fossil fuels.
Sofia completed has done MA in English from Duke University, United States. She is a well seasoned freelance reporter and editor covering the nexus where new energy technology, markets, ecosystems and political economy intersect and overlap.