G7 ministers establish new post-2025 finance goal with $100 billion floor

G7 ministers of Climate, Energy, and the Environment announced a commitment to eliminate coal based power generation by 2035 in a discussion between 28 to 30 April to limit temperature rise to 1.5°C, in Turin, Italy. Although the ministerial meeting couldn’t bolster climate finance, the accord kept options for sustained public investment in gas.

The agreement sets the climate and energy agenda for the countries with the top economy in the world, and is scheduled to be presented to G7 exes at a summit in June. But elections in key countries including the US in this year pose uncertainty to the progress of this accord.

G7, the bloc of the countries with top economies, is accountable for 21% of global emissions, with pressure to respond extensively to COP28, agreeing for shifting from fossil fuels, tripling global renewables capacity, doubling energy efficiency, and releasing climate finance for low income nations.

A newer climate finance goal is anticipated to be settled in COP29 in Baku, Azerbaijan, including the governments’ National Determined Contributions (NDC) to reduce emissions and adaptations prior to February 2025.  

The meeting projected reducing coal power plant utilization for achieving the goal to decarbonize the power sector by 2035, the bloc committed two years earlier.

The decision left scope for public investments in gas, also asserted exceptional scenarios like speeding up the reduction of Russian energy dependency. They also agreed to reduce 75% global methane emissions from fossil fuel by 2030. The G7 energy minister also committed to submit NDCs 9-10 months before the COP30, aligned with a 1.5°C target.

They underscore the need for a new post-2025 finance goal, with a projected floor of $100 billion, and a multi-layered structure inclusive public, private, domestic, and international components.

Under the newly agreed-upon target, the G7 nations have pledged to achieve a sixfold increase in energy storage capacity, recognizing the pivotal role of flexibility solutions such as storage and grid enhancements. These measures are deemed essential for ensuring the seamless integration and sustained viability of renewable energy technologies.

Central to their agenda is a global initiative aimed at achieving 1500 gigawatts (GW) of energy storage capacity in the power sector by the year 2030. Additionally, the G7 member states have outlined plans to escalate investments in electricity transmission and distribution grids, aligning with their respective national climate objectives.

While reaffirming their commitments to 2030 targets set forth in the preceding year for solar and offshore wind energy, the G7 nations have fallen short of scaling up their collective renewable energy ambitions to meet the requisite tripling. Analysis conducted by the independent energy think tank, Ember, indicates that the G7‍‍`s current trajectory is on course for a doubling, underscoring the need for accelerated efforts in this domain.

Despite notable strides in certain areas, challenges persist concerning the financing of climate initiatives and adherence to fossil fuel reduction strategies. While acknowledging a decline in coal consumption across G7 countries, as evidenced by a shift towards renewable alternatives, the lack of a substantial commitment to ramping up renewable energy adoption raises concerns regarding the attainment of established targets.

While applauding the transition away from coal, observers remain apprehensive about the G7‍‍`s stance on natural gas utilization. Calls for robust strategies encompassing a complete phase-out of all fossil fuels, including natural gas, echo sentiments within the broader discourse on climate action.

Emphasizing the imperative of addressing reliance on gas, experts underscore the necessity for decisive leadership and comprehensive transition plans towards renewable energy sources. Luca Bergamaschi, co-Founder and co-CEO of the Italian climate think tank ECCO, underscores the significance of planning for a transition away from gas, citing the absence of concrete measures in this regard as a critical test of the G7‍‍`s credibility.

Mariagrazia Midulla, Head of Climate and Energy at World Wildlife Fund Italy, underscores the importance of reducing gas dependency as a cornerstone of effective climate mitigation efforts. Dave Jones, Director of Ember‍‍`s Global Insights Program, acknowledges the protracted journey towards phasing out coal power while highlighting the persistent challenge posed by gas-powered generation.