G7 has a plan to support investment in new natural gas projects

With the global energy market being unstable, the G7 group is considering supporting new upstream investment in natural gas despite concerns about climate change.

Energy and climate change ministers from G7 members, including Canada, France, Germany, Italy, Japan, the UK, and the US, will hold a summit in Japan next week, where they are expected to discuss ways to reduce emissions within the bloc while facing more pressing energy security issues.

According to a draft document, energy and climate ministers of the G7 countries, including Canada, France, Germany, Italy, Japan, the UK and the US, will emphasize the need to invest in new upstream natural gas supply sources to address energy security concerns following the Russia-Ukraine conflict. “In this context, we recognize the need for necessary upstream investment in liquefied natural gas (LNG) and natural gas that is consistent with our climate goals and commitments,” Reuters quoted the draft content.

The draft is not final and may still change until the summit in Japan, which will be held on April 15 and 16.

The major economies of Europe, including Germany, have witnessed firsthand the need for natural gas supply not coming from pipelines from Russia. The US has sent record amounts of LNG to Europe in the past year as prices rise and as the US pledges to help European allies with gas supply.

Despite opposition from environmentalists, many governments and policymakers have recognized the need to ensure stable and reliable natural gas supplies. The World Bank is now willing to fund some gas projects, although they have committed to stopping funding for upstream oil and gas projects after 2019.

Victoria Kwakwa, Vice President of the World Bank responsible for East and Southern Africa, told Bloomberg in an interview last month that the World Bank may be willing to finance gas projects in Mozambique to ensure greater access to energy if gas remains the cheapest option among energy sources.

Going back to 2017, the WB stated that they would no longer fund upstream oil and gas projects after 2019. However, the group noted that “in exceptional circumstances, consideration will be given to upstream gas projects in the poorest countries where there is a clear benefit in terms of energy access for the poor and the project fits within the countries’ Paris Agreement commitments”.