G7 agrees to accelerate phase-out of unabated fossil fuels. What you need to know about the global energy transition this week

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Roberto Bocca, Head of Energy and Materials, Member of the Executive Committee , World Economic Forum Geneva

• This weekly round-up brings you the latest developments in the global energy sector.
• Top energy news: G7 pushes for global phase-out of unabated fossil fuels; US goes big on DAC in carbon removal push; Chile to nationalize lithium industry.
• For more on the World Economic Forum’s work in the energy space, visit the Shaping the Future of Energy, Materials and Infrastructure Platform.

1. G7 agrees to accelerate phase-out of unabated fossil fuels

The G7 group of wealthy countries has committed to a faster phase-out of unabated fossil fuels. The move has been welcomed as a potential step towards a global deal for all countries to do the same, but the G7 members are facing criticism for not matching the pledge with firm action.

In a joint statement after a meeting in Sapporo, Japan, the G7 countries’ climate ministers agreed “to accelerate the phase-out of unabated fossil fuels so as to achieve net zero in energy systems by 2050 at the latest”. However, they did not set a firm date for doing so.

Reuters

“This is an important step forward,” said French Energy Transition Minister Agnès Pannier-Runacher, noting that no deal was reached on this topic at the COP27 summit at the end of last year.

Wealthy countries have still not met a promise to deliver $100 billion per year, starting in 2020, to help poorer countries cut emissions and cope with climate change. That amount falls far short of their actual needs, but has become symbolic of wealthy countries’ failure to deliver promised climate funds.

While a global deal to gradually quit fossil fuels may not be legally binding, it would create a powerful “north star” to guide future climate negotiations, government policies and investments towards clean energy and industries.

Energy, Materials and Infrastructure

How is the World Economic Forum driving the energy transition?

The World Economic Forum’s Platform for Shaping the Future of Energy, Materials and Infrastructure works across six industries: electricity, oil and gas, mining and metals, chemicals and advanced materials, engineering and construction, and advanced energy solutions. It enables government and business to work together to accelerate the transformation of energy, materials and infrastructure systems.

• In collaboration with Accenture, the Forum is implementing a toolbox of solutions and city sprints to boost sustainability and reduce emissions in urban settings, through the Net Zero Carbon Cities programme.
• The Fostering Effective Energy Transition report summarizes insights from the Energy Transition Index in an effort to assist the world in readiness for energy transition.
• The Mobilizing Investment for Clean Energy in Emerging Economies initiative enables collaborative actions to scale clean energy finance in emerging and developing markets.

Contact us for more information on how to get involved.

2. US goes big on DAC in carbon removal push

The US government has offered $3.5 billion in grants to build factories that will use Direct Air Capture (DAC) to remove carbon dioxide from the atmosphere and permanently store it. This is the largest such effort globally to help halt climate change through the use of DAC.

The sums involved dwarf the funding available in other regions. Britain which has pledged up to £100 million pounds ($124 million) for DAC research and development.

Worsening climate change and inadequate efforts to cut emissions have thrust carbon removal to the top of the agenda, and UN scientists now estimate that billions of tonnes of carbon will need to be sucked out of the atmosphere annually to reach a goal of capping global warming at 1.5°C.

While much of that will come from natural solutions such as planting more trees or increasing the ability of soil to sequester carbon, permanent carbon removal like DAC will also be needed. But the biggest operational plant captures only 4,000 tonnes a year and costs are high. At the same time, the talent pool is fledgling and corporate buyers for the credits largely remain on the sidelines.

The role of oil companies in the space has also raised eyebrows, and developers must muster support for hubs from communities that have often been damaged by big energy projects.

3. News in brief: More energy stories from around the world

Chile’s president plans to nationalize the country’s lithium industry. The South American country is the world’s second-largest producer of the metal, which is essential in electric vehicle (EV) batteries. The move poses a fresh challenge to EV manufacturers scrambling to secure battery materials.

The EU and Norway aim to work together to develop infrastructure to capture and store CO2 emissions and scale up renewable hydrogen production in Europe, according to a draft “alliance” plan. It also signals a similar intent to team up on hydrogen produced from renewable energy.

The shutdown of Germany’s last remaining nuclear reactors in mid-April means the country’s power producers have no option but to further accelerate their ongoing energy system overhaul. Germany’s natural gas supplies are still severely constrained following Russia’s invasion of Ukraine. The government has approved a bill banning new oil and gas heating systems from 2024.

Europe’s most powerful nuclear reactor has begun operations in Finland. The 1,600MW Olkiluoto 3 reactor will help the country reach its carbon neutrality targets and increase energy security. However, it has come online 14 years later than first planned.

At the same time, Greenpeace and other campaign groups are taking the European Commission to court as they seek to overturn EU rules that class nuclear energy and natural gas as climate-friendly investments. The groups are targeting the EU’s “taxonomy”, a list of investments that can be labelled and marketed as sustainable in Europe.

Bangladesh is being forced to cut power to millions of people, as a relentless heatwave leads to a surge in demand for power. Greater use of irrigation pumps by farmers and an increase in commercial activity during Ramadan have also contributed to increased power demand, officials say.

The EU has record levels of natural gas in storage after a warmer-than-expected winter, boosting hopes that it can keep reducing its gas imports from Russia. Natural gas use in the bloc fell by around 18% in the eight months to March because of the weather, The Financial Times reports.

Oil loadings from Russia’s western ports in April will rise to their highest since 2019 at above 2.4 million barrels per day, despite Moscow’s pledge to cut output, trading and shipping sources told Reuters. India and China have bought the vast majority of Russian oil so far in April.

Abu Dhabi National Oil Company (ADNOC) is teaming up with Japan’s Mitsui to verify the greenhouse gas emissions of a clean ammonia project in the UAE. ADNOC is also working with other Japanese companies to strengthen the hydrogen value chain between the UAE and Japan.

A microbe discovered in a volcanic hot spring in Italy can absorb carbon dioxide “astonishingly quickly” and could become an efficient way of removing the greenhouse gas from the atmosphere, scientists say. The idea of using bacteria to capture CO2, potentially enhanced by genetic engineering, is an active research area.

4. More on energy from Agenda

In the past year, the global economy – and peoples’ lives – have been convulsed by an energy crisis that shows no signs of abating. Six global leaders from the public and private sectors share their views on bolstering energy security and the global green transition.

When it comes to offsetting carbon footprints, an increasing number of sustainability leaders are considering contribution models instead of or in addition to commitments that revolve around compensation, such as carbon credits. What’s the difference between compensation and contribution models?

Billions of dollars of investment are being put into clean energy, but the world also needs a sustainable supply of new leaders to oversee the green transition. Here’s how energy companies can build their teams and meet the talent challenge head-on.