Vandana Hari is founder of Vanda Insights, a Singapore-based global energy market intelligence provider.
Group of Seven climate, environment and energy ministers ended their deliberations a week ago in Sapporo, Japan by including a reprieve sought by Tokyo for the continued use of coal and natural gas in an annual joint statement on accelerating the transition to clean energy.
But the compromise and the discord over fossil fuels that preceded it are reminders of how dangerously disjointed the pursuit of sustainable energy has become.
Japan, this year’s G-7 president, was challenged to find a way to balance its ideology of pursuing a flexible, pragmatic transition involving a diverse mix of energy sources with the more radical, rigid approach of Western nations arguing for jettisoning certain fossil fuels to bring 2050 net-zero goals within reach.
As much as Japanese delegates were under pressure from their G-7 colleagues and under fire from environmentalists through the weeks of ngotiations leading up to the Sapporo statement, they were also being closely watched by Asian neighbors who depend heavily on coal and want to ramp up the use of gas as a cleaner-burning fuel.
Many of these countries have been looking to Tokyo for technology and funding to help them decarbonize their use of fossil fuels.
Japanese power utilities, for their part, pushed the government to sell the G-7 on the idea of allowing countries to choose their own transition paths. These companies actually live with the practical challenge of balancing supply security with safety and decarbonization. Their peers in less affluent Asian countries have the additional burden of trying to maintain affordability.
As it turned out, Japan managed to steer the G-7 away from setting a hard deadline to phase out coal and toward recognizing the need for continued investment in gas.
The final agreement forged by the G-7 in Sapporo was emphatic on reaffirming a commitment to a faster shift to green energy, s expected, while tiptoeing around the fate of coal and gas.
Members agreed to work toward “accelerating the phaseout of domestic, unabated coal power generation,” rejecting Canada’s push to ban the black stuff by 2030 as well as a U.K. proposal for largely phasing out use by 2035.
While such compromises on matters of energy transition may give the appearance of international cooperation and collaboration on highly divisive issues, they have unintended consequences.
Emissions from coal-fired power plants are notoriously hard and expensive to abate. This means that rich Western countries are effectively calling for abandonment of the fuel.
This would be highly shortsighted in the absence of viable alternatives, as the EU should know, given that its own use of coal in its overall power generation mix rose to 16% from 14.5% last year amid the energy crunch resulting from the Ukraine war and related sanctions.
Emerging Asian countries, some of them still saddled with energy poverty, re much more reliant on cheap coal-fired power to meet fast-growing demand.
Moreover, the world’s determined march away from the oldest of fuels disincentivizes investment in, and research and development of, technologies to decarbonize it.
Coal storage at the Hekinan Thermal Power Station in Hekinan, Japan: Japan remains a heavy user of coal for power generation. © Reuters
Japan’s plans to burn coal together with ammonia derived from hydrogen to reduce power plant emissions at home and in other Asian countries have been panned for overlooking the harmful gases emitted in burning ammonia.
This disapproval has some basis in chemistry. But ask the critics for an affordable, readily available alternative and you get a deafening silence.
The concession made by the G-7 on natural gas investment, for which Japan has been strongly advocating, was even more ludicrous.
The Sapporo statement says that a primary goal in accelerating the energy transition is to reduce gas demand. Investment n the gas sector “can be appropriate” to address potential market shortfalls triggered by the Ukraine war, it says, but only with caveats.
These include not creating “lock-in effects” that might prevent future shifts away from gas by ensuring that projects are integrated with the development of low-carbon and renewable hydrogen.
Gas represents almost a quarter of the world’s and the EU’s primary energy mix and is especially valuable as a lower-carbon alternative to oil and coal. Sustained, robust investment in gas is critical not just because Russia has slashed supplies to Europe, but also simply to ensure the world’s energy ecosystem does not collapse.
Exploration and development of gas fields as well as liquefaction projects to enable the fuel to be easily shipped across the globe cost billions of dollars and have long project lead times, which means investors need long-term certainty about demand.
Stipulating that investments in gas be tied to hydrogen projects is the surest wayof stymying the sector. The G-7’s decision to forsake gas will be an added driver for similar action by the oil majors and big international upstream players, which are concentrated in the developed world.
The only reference in the G-7’s latest plan to what should be added to the energy mix instead of subtracted was an agreement among the members to collectively install another 150 gigawatts of offshore wind power capacity and 1 terawatt of solar capacity by 2030.
That is equivalent to almost three times the global growth in offshore wind capacity over the past decade. Even if this ambitious goal and the solar target are somehow met, they will most certainly not eliminate the need for coal and gas.
Japan’s efforts to close the gap between the ideal and the attainable, the Global South and the Global North, environmental sustainability and energy security are laudable. It is time more big economic powers joined it.
