Flags of the G7 nations

The G7 Should Lead the Transition Away from Fossil Fuels. Here’s how

The G7 Leaders’ Summit is just around the corner, with heads of state due to gather June 13-15 in Borgo Egnazia, Italy. At this meeting, G7 leaders have a critical opportunity to consolidate and strengthen their progress on the energy transition, including on fossil fuel phase-out. 

By Natalie Jones on June 10, 2024

The need for a transition away from fossil fuels is beyond doubt. At UNFCCC COP 28 countries came to a landmark agreement on “transitioning away from fossil fuels in energy systems”, raising the bar for what is expected from the world’s governments. The International Energy Agency showed in 2021 that no new fossil fuel production was needed on a path to net zero emissions by 2050. A UCL-IISD study published in the peer-reviewed journal Science in May extended that analysis to show there is no room for any new oil and gas fields, coal mines, or coal- or gas-fired power stations in any credible 1.5°C-aligned scenario. The Intergovernmental Panel on Climate Change (IPCC) Sixth Assessment Report is clear that unabated fossil fuels must be rapidly phased out globally. Meanwhile, devastating climate impacts from floods to heatwaves in recent weeks make clear the consequences of climate action failure.

Coinciding with the end of the climate talks in Bonn, and bringing together several of the world’s advanced economies – Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States, as well as the European Union – the G7 meetings are a chance to set the political mood music for the Global North for the rest of 2024. The G7 are among the world’s largest fossil fuel producers, accounting for 27% of current global oil, gas, and coal production, while the US, UK, and Canada alone could be responsible for nearly half of the CO2 pollution from new oil and gas extraction projects planned between 2023 and 2050. If managed right, the G7 leaders could set the stage for further ambition in what remains of the year.

Here are four ways the G7 leaders can show true leadership on the transition away from fossil fuels.

Bring Forward the Coal Phase-Out Date to 2030

The G7 leaders should bring forward the coal phase-out date to 2030, with no exceptions.

In April 2024, G7 Climate, Energy, and Environment Ministers took a crucial step forward by committing to phase out ‘existing unabated coal power generation’ during the first half of the 2030s ‘or in a timeline consistent with keeping a limit of 1.5°C temperature rise within reach, in line with countries’ net-zero pathways’. This built on G7 Leaders’ 2022 commitment to decarbonizing their electricity systems by 2035, prioritizing ‘concrete and timely steps towards the goal of an eventual phase-out of domestic unabated coal power generation’.

What is critical, however, is that the first half of the 2030s – by 2035, in other words – is not fully aligned with what the science says is necessary to keep 1.5°C in reach. The International Energy Agency’s (IEA) Net Zero Emissions by 2050 Scenario (NZE), the IEA’s main 1.5°C-aligned pathway, counts on advanced economies ending all unabated coal-fired power generation by 2030. The Powering Past Coal declaration, which the United Kingdom, Italy, Germany, and Canada have already signed, affirms the need to phase out coal by 2030 among the Organisation for Economic Co-operation and Development countries, as well as the European Union.

End the Development of New Long-Lived Fossil Fuel Infrastructure, and Commit to Phase-Out Timelines

Leaders should commit to not licensing or permitting any new long-lived fossil fuel infrastructure.

The G7 Climate, Energy and Environment Ministers reaffirmed the COP 28 call to transition away from fossil fuels in energy systems, and their own 2023 pledge to ‘accelerate the phase out of unabated fossil fuels so as to achieve net-zero in energy systems by 2050 at the latest in line with the trajectories required to limit global average temperatures to 1.5°C’. They committed to operationalising their own contribution to the transition through the development and implementation of domestic plans, policies and actions, ‘including to inform and be reflected in our NDCs and LTSs’. This is all positive, and leaders should reaffirm this commitment—but should go further.

In this light, it is worrying that the G7 Ministers stated that investment in fossil gas can be ‘appropriate as a temporary response’, and stressed the ‘important role that increased deliveries of LNG can play’. Recent studies have demonstrated that existing gas infrastructure and projects under construction are enough to ensure a steady and diversified supply of natural gas, and emancipate G7 members and their allies from Russian gas exports. Indeed, new gas investments could rapidly turn into stranded capital, undermining the competitiveness of G7 economies.

Leaders should instead avoid dangerous distractions and rather focus on tripling renewables and doubling the rate of energy efficiency improvements as key steps towards greater energy security.

Make Tangible Progress to End Fossil Fuel Subsidies

Although the G7 has pledged to phase out “inefficient” fossil fuel subsidies every year since 2009, specifying a 2025 timeline in 2016, so far implementation has been severely lacking. In 2022, the latest year for which data is available, fossil fuel subsidies across G7 countries hit an all-time high of USD 199.1 billion.  

This year, the G7 needs to urgently implement their commitment to phase out fossil fuel subsidies. G7 ministers in April committed to report in 2025 on progress towards the achievement of their commitment, and consider options for developing joint public inventories of fossil fuel subsidies. At a minimum, this reporting should be done via the formal reporting process for Sustainable Development Goal (SDG) indicator 12.c.1 (fossil fuel subsidies) – a process that hardly any countries have completed so far.

What’s more, there has long been concern about the qualifier “inefficient”, which only creates uncertainty about which subsidies need reform. In 2024, G7 Ministers committed to promote a common definition of inefficient fossil fuel subsidies, and called on relevant international organizations including the OECD and the IEA to work together to further develop such methodologies. However, a better outcome which leaders can still adopt is to drop “inefficient” altogether and instead require each G7 member to create a national roadmap for subsidy phaseout. This would require them to justify any remaining subsidies and identify alternative policy levers to achieve the same objectives.

The G7 should prioritize phasing out any support measures for fossil fuel exploration and production.

Producer subsidies do not help with energy poverty, since any cost reductions are distributed across all industrial and household customers, not just the vulnerable. Removing producer subsidies helps to align demand and supply while reducing the risk of stranded assets.

Implement the Commitment to End International Public Finance for Fossil Fuels

In recent years, the G7 has made progressive steps forward on ending international public finance for fossil fuels. In 2022, following a commitment to end direct government support for unabated international thermal coal power generation in 2021, G7 leaders extended this to the entire international unabated fossil fuel energy sector, except in “limited circumstances clearly defined by each country consistent with a 1.5°C warming limit and the goals of the Paris Agreement.”

In 2024, G7 ministers reiterated this commitment, adding a pledge to “scale up” support for clean energy, and G7 leaders should reaffirm it.  G7 ministers also committed to ‘work constructively to reach an agreement’ on talks to end export finance for oil and gas at the OECD—a crucial political signal that G7 leaders should again reaffirm.

Beyond reaffirming their commitment, however, in 2024 G7 countries should go beyond statements to action. Although the United Kingdom, France, and Canada have implemented policies ending international public finance for fossil fuels, Italy, Japan, and Germany’s policies contain large loopholes, and the United States has yet to publish such a policy. Since the end of 2022, the G7 has financed at least USD 8.5 billion in public support for fossil fuel projects abroad, with Japan and the United States providing the majority of this financing. Fulfilling this commitment this year is key to ensuring the G7’s credibility.

As the Summit kicks off on Thursday, G7 leaders have a critical opportunity to accelerate the transition away from fossil fuels. A failure to do so would be an excuse for inaction from the rest of the world.

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