World’s richest nations pledge to end investment in overseas coal projects

By Melissa Coade

Tuesday May 25, 2021

1.5 degrees
(Image: Adobe/Fokussiert)

A commitment has been reached among the UK, the US, the EU, France, Italy, Germany and Canada at a meeting of the G7 Environment and Climate ministers at the weekend to limit goal heating to 1.5 degrees Celsius and completely phase out coal in the 2030s.

The virtual meeting, hosted by the UK, saw the G7 group commit to reaching net zero carbon emissions by 2050 and to pursue ‘deep’ reduction targets for emissions this the 2020s.

One of the group’s signature action items is to end new finance for coal power by 2021, which the G7 says will ‘accelerate the transition away from unabated coal capacity and to an overwhelmingly decarbonised power system’ in about 10 years’ time. The move is a first step to transitioning to cleaner energy sources such as solar and wind power, the group said in a statement.  

“We know we need to consign coal to history and the G7 has taken a major step towards a decarbonised power system,” COP26 President-Designate and British politician Alok Sharma said.

“We are acting abroad as we’re doing at home by agreeing to phase out international fossil fuel finance, starting with coal –  another key milestone in this crucial year for climate action.”

Australian energy and environment experts have warned that as a result of the weekend announcement, some parts of the national economy will feel the effects of the international pact to stop financing coal – but the risk of climate change poses a greater threat to our national interests. 

University of Tasmania’s Professor Peter Strutton said the G7 decision showed that coal was now ‘obsolete’. He lauded the development, describing it as a significant step towards phasing out coal but that ongoing diplomatic efforts were needed to continue global progress towards net zero. 

“We still need international diplomacy momentum and sound government policy to work in concert with the financial sector to achieve the rapid progress we need,” Strutton said.

Associate Professor Christian Downie from ANU’s School of Regulation and Global Governance noted that in 2015 Australia, along with other OECD countries, had committed to limiting the finance of coal. The latest G7 pledge was consistent with the goals of the Paris Agreement to address climate change, he added, saying it would help stop taxpayer dollars being wasted on bad investments.

“The G7 announcement that it will end public financing for overseas coal projects will make it very difficult for any country now to fund new coal plants,” A/Prof Downie said.

“It is also good news for taxpayers given that there is a real risk that any new coal projects could become stranded assets posing significant risks for affected countries.”

According to Associate Professor Ariel Liebman from Monash University’s Energy Institute, the world’s richest nations moving away from fossil fuel industries clearly spells out to other countries – like Australia – that they should stop investing, not only in coal, but other fossil fuels such as natural gas or oil derivatives. He said the commitment was a long time coming and ‘absolutely the right decision’.

“Australia should follow suit and additionally commit no new gas fired plant to abatement trajectories consistent with 1.5 degrees,” Liebman said. 

At its weekend meeting, the G7 also backed a range of global biodiversity targets, secured measures to combat deforestation, and pledged extra support for sustainable supply chains which ‘decouple agricultural production from deforestation and forest degradation’. It is the first time that the group has committed to reversing the loss of biodiversity. 

The UK’s Environment Secretary George Eustice said 2021 was a crucial year for global action on the environment and climate. 

“We have seen tremendous progress this week and it has been great to see countries working together to raise our ambition and lead by example, each playing our part,” he said. 

The agreement comes after a recent jump in coal consumption prompted the International Energy Agency to forecast that 2021 will experience the second biggest rise in emissions on record.

About the author
0 Comments
Inline Feedbacks
View all comments
The Mandarin Premium

Insights & analysis that matter to you

Subscribe for only $5 a week

Get Premium Today