On Monday, 30th of May, ministers from the world’s biggest economies reached an agreement that could shift an estimated $33bn or £26bn a year to clean and renewable energy sources by stopping all funding of overseas fossil fuels by the end of the year.
This move should choke off investments alot of the investments made towards ‘carbon bombs’, a gas or oil extraction project such as oil rigs, which were hindering te world’s climate targets.
On Friday, the G7 which consists of - Japan, UK, US, Canada, Italy, France and Germany who hosted this year in Berlin, met to discuss climate issues and agreed to end funding oil, gas and coal projects overseas which use taxpayer money. This was surprising since Japan had been openly against the idea at last year's Cop26 climate summit.
The British president of the Cop26, Alok Sharma said this change in attitude has come about due to the war in Ukraine and the rising prices of energy and fossil fuels; ‘Solving the global energy crisis and the chronic climate crisis requires the same solution – it’s about reducing our dependence on fossil fuels as part of a managed transition.’
However, newer projects that are already underway may not be subject to the lack of funding. Meaning these new projects will make reducing the global temperature to 1.5C a lot more difficult.
The Guardian discovered that nearly 200 new carbon bombs have started up and 60% of them are already pumping and in operation. The finance for these have likely come from public or private investors from outside G7 countries. But with this new agreement by the G7 it could make international investors less likely to invest in overseas carbon bombs.
The G7 agreement failed to address public sector finance of fossil fuel within G7 countries, with some members still subsidising fossil fuels with tax breaks.
On Thursday, 26th of May, the UK announced a windfall tax on fossil fuels companies but a loophole has already been found that allows companies to escape 90% of the tax if they invest in new oil and gas production in the North sea.
This comes as a response to alleviate short term power issues as the cost of living has risen exponentially within the last few months. However, experts say that due to the potentially decade long process of these rigs to come into production it may come too late.
Last year, the G7 said it would end all overseas coal financing, however this is the first time the G7 have come to an agreement to end all financing of all fossil fuels overseas.
Image Credit: ICTD
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