Germany pushes G7 to backtrack on fossil fuel finance rule, may affect climate targets

In a major reversal on tackling climate change, Germany is pushing for Group of Seven nations to walk back a commitment that would halt the financing of overseas fossil fuel projects by the end of the year, as energy supplies dwindle due to Russia Ukraine war, as reported by Bloomberg. 

On Friday, speaking during a press conference in Brussels, Prime Minister Mario Draghi said Italy has managed to reduce Russian gas imports from 40 per cent last year to 25 per cent at the moment. This has been possible also by signing new gas deals in countries including Congo, Algeria and Angola. 

On Thursday, Habeck raised the alert level under Germany's emergency gas plan after supplies of gas from Russia were slashed, bringing Europe's economy one step closer to rationing. 

Russian energy giant Gazprom last week reduced deliveries via the Nord Stream pipeline to Germany by 60 per cent, attributing the move to a delayed repair. Germany has dismissed the gas company's technical justification, seeing a "political" motive behind the decision: retaliation for the West's support for Ukraine following Moscow's invasion.

Germany has responded to the cuts by reviving coal plants and providing financing to secure gas supplies. The World Nuclear Association, an industry lobby group, is urging the G7 to boost access to nuclear technologies.

G7 ministers, in making their commitment to end direct international financing of fossil fuels by the end of 2022, acknowledged for the first time that fossil fuel subsidies were incompatible with the Paris Agreement. The group also reaffirmed a commitment to end “inefficient fossil fuel subsidies” by 2025.

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The ministers acknowledged, however, that investment in the LNG sector was a necessary response to the current crisis “in a manner consistent with our climate objectives and without creating lock-in effects.

As reported by Bloomberg, Alden Meyer, a senior associate at climate change think tank E3G said, “This would be a huge setback from the progress we made last month at the G7 energy and environment ministers when we finally brought Japan, the last G7 holdout, into the commitment to end such financial support for fossil fuels.”

“Where we saw Chancellor Merkel being the climate chancellor at the last G7 summit Germany hosted, Scholz could go down in history as the climate backtracking Chancellor, which I think would be a real mark on his record, and we don’t need to do this,” he added.

(with inputs from agencies)

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