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The G7 is scheduled to hold a Climate and Environment Ministers meeting in Japan to discuss climate, energy, and environment issues. As the world economy prepares to shift from fossil fuels to renewable energy, the G7 nations are under pressure to make progress on climate issues. However, there are indications of backsliding on several issues, including power sector decarbonization by 2035, a coal phase-out by 2030, fossil fuel subsidies, and LNG investment. Japan’s Green Transformation (GX) plan is also on the agenda, with negotiations ongoing over whether the G7 should endorse it. Japan aims to expand the GX to Asia through the Asia Zero Emission Community (AZEC) to provide “Zero Emission Thermal Power” technologies (e.g. ammonia /coal co-firing).

“It’s 2023 – continuing to repeat the same weasley line about phasing-out “inefficient” fossil fuel subsidies by 2025 without demonstrating meaningful action is cynical at this point. Ministers should show up in Sapporo ready to take accountability for their lack of progress and with concrete ideas for how to phase-out all fossil fuel subsidies domestically and internationally in the next two years.”

Catherine Abreu, Founder & Executive Director, Destination Zero 

The draft communiqué calls for all major economies to play a role in limiting the increase in global temperature, with a focus on enhancing Nationally Determined Contributions (NDCs) and peaking emissions by 2025. The G7 also supports the use of carbon markets and pricing to achieve net-zero emissions.

There is agreement on mandatory climate-related financial disclosures, with the G7 calling for more partners beyond the group to join this effort. The G7 has two priorities this year: the shift of all financial flows and widening the donor base, with emerging economies contributing. The G7 also supports the development of a Climate Club, focusing on the decarbonization of industries, which could be launched by COP28.

The UK has proposed a 2030 deadline for phasing out unabated domestic coal power generation, which has been supported by France but drawn reservations from Japan, the EU, and the US. Japan has reiterated its commitment to achieving a fully or predominantly decarbonized power sector by 2035 and proposes inviting the IEA to report on the various actions to accelerate the phase-out of domestic unabated coal power. However, it does not commit to implementing any actions that the IEA report might recommend, which contrasts with significant progress made in other sectors such as solar and wind in the past year

The draft text notes that hydrogen and ammonia can be effective tools to advance decarbonization in hard-to-abate sectors. Japan specifically is proposing to use ‘hydrogen and its derivatives’ (i.e ammonia) in the power sector, for co-firing with coal. However, the outcome of this decision matters in terms of consistency with the G7’s commitment on 2035 power sector decarbonization and ending international fossil fuel financing by 2025.

There is intense discussion of Japan’s proposed language calling for upstream investment in natural gas and LNG, given the risk of GHG emissions lock-in and stranded assets if future markets for gas are less than expected. Japanese companies and banks have invested over $60 billion in upstream gas and related LNG-infrastructure for export and import over the past 10 years with vested interests driven by concerns for diversification.

“Opening the door for new upstream gas investment and LNG infrastructure is not needed for energy security and fundamentally at odds with where global markets need to go, if we are to keep 1.5 within reach. Oil and gas production needs to decline globally by at least 65% between now and 2050 to be in line with the IPCC emissions reduction pathways. The most secure and cheapest way out of the energy and climate crisis is reducing gas demand”.

Luca Bergamaschi, Founder & CEO of Italian climate think tank ECCO

In conclusion, the G7 meeting in Japan will play a pivotal role in setting the energy transition agenda for other Asian countries. While there is a clear signal of unity on messages to China, there are also divisions among the group over key issues. The outcome of the meeting will build political momentum for the G7 Leaders Summit scheduled for May 19-21 in Hiroshima and send signals for talks later in the year at the G20 in India and COP28 in the UAE.

“Transforming our global energy system to run entirely on renewable energy is the strongest lever we have for combating climate change. There must be an immediate focus on electrifying as many sectors as possible through renewables – followed by scaling the solutions to tackle the hard-to-electrify sectors. Here’s the good news: We have the technologies available to achieve all of this. But we need more speed and more scale.  

Ingrid Reumert, Senior Vice President, Global Stakeholder Relations, Ørsted


Topic detailed links 

We Mean Business G7 page here.

E3g explainer on ammonia co-firing here
Climate Integrate Green Transformation (GX) explainer here
Ember Global Electricity Review 2023 here