G7 to Stop Funding Coal-Fired Power, Promises $100 Billion
Environmental ministers from the G7 major industrial countries agreed to end financing for international coal-fired power generation and to speed up the phasing out of coal plants by 2035.
G7 or the Group of Seven is an intergovernmental organization made up of the world’s largest developed economies. These are Canada, France, Germany, Italy, Japan, the UK, the U.S., and the European Union.
The group agreed that it will phase out coal-fuelled power during its annual meeting in Germany. They also reaffirmed decarbonizing the electricity sector by 2035.
This commitment will especially impact Japan as it strongly depends on coal-fired power plants.
Unabated coal-fired plants are those that don’t use technology that captures and uses CO2.
Carbon capture and utilization technologies are one of the hottest trends in the carbon market today. They hold great promise to slash emissions by capturing CO2 and putting it into meaningful uses.
The G7 Promise: $100 Billion Each Year
The ministers from Group Seven advanced climate action, energy security, and environmental protection.
Their pledge marked the latest in a global push for governments worldwide to end public funding for fossil fuel projects. This move from the G7 nations is to also help developing nations grow their economies without depending on coal-fired power.
In particular, they plan to speed up reductions in using Russian natural gas and replace it with clean power instead. The wealthy nations also expressed intentions to have zero-emissions vehicles by 2030.
Bronwen Tucker, public finance campaign co-manager at Oil Change International, said:
“The G-7 committing to end public finance for fossil fuels and shift it to clean is a massive win… We now need concrete action, not just words.”
Indeed, the richest countries committed over again to generating at least $100 billion each year in climate financing to help poorer countries deal with the effects of climate change and boost clean energy.
Yet, that figure is only a fraction of the funding needed to achieve those goals. And the wealthy nations have yet to remain true to that promise.
In fact, President Biden didn’t even succeed in convincing Congress to provide the amount (over $11 billion a year) he asked to fight climate change.
Even the private sectors in the G7 nations need to pump up financing, making it trillions rather than billions.
This is in line with the IEA’s analysis that developed countries need to invest $1.3 trillion in renewable energy, at the least. This means they have to triple investments in clean power and electricity during this decade.
Funding support for the transition from fossil fuel economies to sustainable and clean energy sources gained steam recently. This is despite the fact that this is happening very slowly as it should be.
To meet the Paris Accord on climate change, the world has to limit global warming to the critical 1.5⁰C.
And a big part of that is to phase out the use of coal-fired power plants that the G7 is promising.
What’s more, other countries should also be doing the same to further cut global emissions.
A bigger pact during the U.N. Glasgow climate conference (COP26) where over a hundred nations also committed to stopping the use of coal. But two of the biggest users of coal, the U.S. and China, didn’t join the agreement.
Yet, the U.S. along with other countries decided to have a separate pact to end using public money on global projects that use coal. Doing so will divert about $18 billion each year from fossil fuel projects to clean energy projects.
Real Deal with G7 Coal-Fired Power Generation at Home
However, the pledge to restrict tax money on fossil fuel projects is not affecting what nations do at home.
For instance, Japan, China, and South Korea didn’t sign the COP26 agreement. These three countries make up almost half of the international financial support for fossil fuel projects.
Still, cutting the flow of investments to unabated coal-fired power plants is vital not only for the G7 but for the entire world to meet climate goals.
In particular, there must be no more fossil fuel development after 2050 for the world to reach net zero emissions by that year.
The good side is that even if the shift to clean and renewable energy is slow, some governments have made some progress in scaling back dependence on coal-fired power generation.
Take for example the case of the U.K. This G7 member proposed a windfall profits tax in the form of a 25% surcharge on “the extraordinary profits the oil and gas sector is making.” This tax policy will raise 5 million pounds aimed to help pay for the cost of living in the UK.
Meanwhile, the British government also proposes a huge tax deduction to entice oil and gas companies to invest in projects in the country. This deduction would double tax relief for businesses that invest in the UK, covering 91% of those investments.
Other G7 countries are also citing similar actions to eventually phase out coal-fired power plants by 2030.
Canada reinforced the need to shift to clean energy sources and support for developing countries to phase out coal. Its promise involves $1 billion in funding for the Climate Investment Funds Accelerated Coal Transition initiative.
Canada’s 2030 Emissions Reduction Plan includes $9.1 billion in new investments to make the country a leader in the transition to a cleaner economy.
Steven Guilbeault, Canada’s Minister of Environment and Climate Change stated that:
“The world cannot wait – we must continue to mobilize and deliver action. G7 leaders have clearly said that securing energy security and fighting climate change are mutually reinforcing goals.”
It’s crucial that G7 leaders seek ways to ramp up the shift to cleaner energy.
But reducing global emissions, in the long run, places the developing nations in dire need of big funding to adopt greener and cleaner ways to do business than relying on fossil fuels.
The post G7 to Stop Funding Coal-Fired Power, Promises $100 Billion appeared first on Carbon Credits.