How the G7 Leaders’ Summit can drive the global energy transition (2024)

G7 leaders need to firmly express the necessity of decarbonising the power sector by 2035, ideally citing the G6’s preferred unambiguous language of “fully decarbonised” rather than Japan’s added “or predominantly” caveat, which dilutes and offers scope for misinterpretation around G7 ambition. Power sector transition must be contextualised in terms of a broader movement away from fossil fuels, including a commitment to accelerate the phase-out of unabated fossil fuels, to achieve net zero in energy systems by 2050 at the latest.

Japan is keen to promoteammonia co-firing with coal. It is important that other G6 countries ensure that any mention of hydrogen and ammonia in the final text must include restrictions and guardrails to ensure that hydrogen and ammonia should be used only in hard-to-abate sectors; and that ammonia for power generation, if considered at all, must be aligned with a 1.5°C pathway and the G7’s goal to decarbonise the power sector by 2035.

At its Climate and Energy Ministerial, the G7 made for the first time an explicit call for an end to new coal construction globally. A firm commitment to “no new coal” at leaders’ level would signal thegrowing trend away from new coal outside of China. It would mean Japan will need to stop issuing new permits for coal power plant construction, increasing the obstacles for the proposed Genesis Matsushima coal power project to proceed, and invite scrutiny of the US’s CONSOL plant which seems again to be in the pipeline. Committing to end coal construction – and supporting other countries to do so – would be an important foundation for further “no new coal” commitments at the UN Climate Ambition Summit in September (Guterres’s top ask in his “Acceleration Agenda”), G20 and at COP28.

Specific targets for deploying solar and wind power will signal that the G7 is confident in delivering clean power at scale, and boost momentum forglobal renewables targetsto be set at COP28.

Though an acknowledgement of a potential need for further investments in the gas sector found its way into the outcome of the Climate and Energy Ministerial, the G7 committed to ensure their alignment with climate objectives, which should de-facto exclude any new upstream gas assets. Furthermore, the G7 has for the first time highlighted the need to accelerate gas demand reduction and clean energy deployment as key instruments towards the security of gas supply. However, the risk persists that Japan interprets this language in a way that justifies new upstream investments, and the G6 must make sure to hold Japan accountable and avoid any further confusing signals on gas at Leaders. In addition, the Group must voice their support to other, particularly developing, gas-importing countries to reduce their gas demand and boost the resilience of their energy systems.

The G7 meeting of Finance Ministers in Niigata, 11^th– 13^thMay, failed to deliver the level of ambition needed to address the climate crisis. G7 leaders need to demonstrate progressiveness and ambition on a whole-of-finance reform agenda for the transition, where their Finance Ministers did not.

Leaders need to clarify their vision for the reform of the international financial architecture to dramatically scale up climate finance. This should reinforce and build on high-ambition proposals such as Barbados PM Mia Mottley’s Bridgetown Initiative and the V20’s Accra to Marrakesh agenda. It must include far-reaching reforms of multilateral development banks to expand their financing of global public goods, including climate as well as pandemic preparedness.

Crucially, G7 Leaders need to acknowledge – and begin to address – the major trust deficit in many emerging markets and developing economies, which threatens to undermine global solidarity on climate. This must include a strong statement on the pressing need to resolve the immediate debt and liquidity crises facing many developing countries, which is undermining those countries’ abilities to support the low-carbon transition and meet the Sustainable Development Goals. In the medium term, G7 countries will need to commit to a new issuance of IMF Special Drawing Rights and their allocation to innovative financing platforms to accelerate the global clean economy transition. Such a move would create positive momentum for a high-ambition outcome from the France-India co-hosted Summit for a New Global Finance Pact in Paris in June.

These commitments need to be underpinned by the delivery of private finance at scale to support the climate transition everywhere, starting with low- and middle-income countries. G7 leaders need to redouble their efforts to design and implement tools that will enable the delivery of private finance, including through a globally harmonised disclosures framework, private sector transition planning, or revised prudential rules for banks and insurers to secure both their contribution and resilience to the transition.

The G7 is finalising a Clean Energy Economy Action Plan to accompany the Leaders’ Communique, aimed at building reliable clean energy supply chains, deepening cooperation with low- and middle-income countries, driving decarbonization of hard-to-abate sectors, and scaling up investment in clean energy manufacturing and deployment.

While it is welcome that the G7 are discussing the role that international trade reforms, scaled-up public and private sector investment in resilient and sustainable clean energy supply chains, and alignment with internationally supported standards on labour practices and human rights should play in supporting decarbonisation, G7 leaders will need to provide more specifics about just how they intend to live into these objectives when they meet with leaders from Brazil, India, Indonesia and other developing countries at their summit in Hiroshima this weekend; otherwise, they risk seeing this initiative dismissed as just nice-sounding rhetoric without sufficient substance to back it up.