Berlin at odds with UK and France over support for public investment in fossil fuel despite climate impact

Germany is pushing for G7 leaders to endorse public investment in the gas sector at their summit next week, setting up a clash with countries that argue such support is incompatible with global climate goals.

Tensions have flared in pre-summit discussions as nations including the UK and France reject Germany’s demands to include support for public investments in gas in the meeting’s final document, said several people briefed on the talks.

Climate campaigners argue G7 countries should lead a global shift away from fossil fuels at the Japan summit on May 19-21 and avoid weakening commitments reached last month among G7 environment ministers.

Russia’s full-scale invasion of Ukraine last year and its subsequent move to drastically reduce gas supplies to Europe plunged Germany and other big consumers of Russian hydrocarbons into an energy crisis from which they are only now recovering.

Berlin’s response was to build liquefied natural gas terminals on its northern coast, supported by huge public subsidies, and to scour the world to lock up alternative supplies of gas. It said these terminals were an interim measure ahead of the shift to greater renewable energy sources in the future.

Germany insisted on wording in the statement from last year’s G7 summit in Schloss Elmau, Bavaria, that conceded the necessity of public investment in gas — a move that led environmental groups to accuse the G7 of “backsliding” on its climate goals.

The 2022 statement said that in the “exceptional circumstances” created by Russia’s war and its halt to energy supplies, “publicly supported investment in the gas sector can be appropriate as a temporary response”.

“Investment in this sector is necessary in response to the current crisis,” it added.

German officials want this year’s communiqué from Hiroshima to include similar wording. “We need to use gas as a transitional source of energy,” one said. “We can’t overlook the fact that things have changed [with the war in Ukraine] and the overall supply of gas is scarce.”

Countries including the UK and France have argued that last year’s support for gas was meant to be temporary, saying Germany has already built the LNG terminals it needs, according to people familiar with the discussions.

Germany has insisted its gas investments are compatible with its climate goals because the LNG terminals it is building can be repurposed to receive hydrogen, which is cleaner than gas when burnt, but whose production typically involves significant use of fossil fuels. So-called green hydrogen, made using renewable energy, has not been developed at scale.

Petter Lydén, head of international climate policy at Germanwatch, a non-profit group, called on G7 leaders “to show their commitment to phasing out fossil fuels”.

“Countries like Germany have already successfully found ways of reducing their dependence on gas, and any signal that more gas is needed goes directly against the known needs,” he said, adding that any reversal on last month’s G7 meeting was “unacceptable”.

In March, a coalition of industry bodies, including the American Petroleum Institute, the Asia Natural Gas & Energy Association, Eurogas and the US Chamber of Commerce, wrote to the leaders of the G7, urging them to continue to back investments in LNG.

At the same time, climate activists have been lobbying heavily for the G7 to roll back its support for gas, made up mainly of heat-trapping methane, on the basis that it harms the environment and communities that live near fracking and drilling sites.

The EU’s decision to label gas as “green” under its financial taxonomy rules after German lobbying has sparked legal challenges from environmental groups and member state governments.