G7 ministers agree on 'various pathways' for net zero, energy security

G7 ministers agreed April 16 on pursuing a common goal of net zero through "various pathways," while ensuring energy security through steps such as accelerated energy transition, investment in the natural gas sector and countering geopolitical risks for critical minerals supply chains.

The pursuit of "various pathways" for a common goal of net zero, while ensuring energy security and managing geopolitical risks was three major take aways, Japan's Minister of Economy, Trade and Industry Yasutoshi Nishimura said, following the end of the G7 Ministers' Meeting on Climate, Energy and Environment in Sapporo, northern Japan. The ministers also underlined their commitment to accelerate the phase-out of unabated fossil fuels to achieve net zero in energy systems by 2050 at the latest in line with the trajectories required to limit global average temperatures to 1.5 degrees Celsius above industrial levels.

"While acknowledging various pathways according to each country's energy situation, industrial and social structures, and geographical conditions, we highlight that these should lead to our common goal of net zero," the ministers said in a communique approved at the G7 meeting.

"In this regard, we reaffirm the importance of realizing simultaneously safety, energy security, economic efficiency, and environment (S+3E)," the ministers said.

"In addition to this, we emphasize the importance of countering geopolitical risks, including with respect to critical minerals, for the clean energy transition," the ministers said. "To this end, we commit to holistically address energy security, the climate crisis and geopolitical risks."

Gas investment

G7 ministers also agree that some gas investment is "appropriate" to address potential shortages amid the ongoing Russia war in Ukraine, and impacts of high energy prices and inflation, particularly in developing countries.

The G7 communique recognized the need to accelerate the clean energy transition through energy savings and gas demand reductions.

"High energy prices and inflation have had a negative environmental, economic and social impact on the economies and people's lives all over the world, especially in developing countries," the ministers said.

Both high energy prices and inflation have prevented these countries "from securing affordable energy supply they need and increasing the price of fertilizer and food."

The meeting was attended by Indonesia as the chair of the Association of Southeast Asian Nations, along with India as the president of G20, and the UAE as the host of the 28th Conference of the Parties to the UN Framework Convention on Climate Change (COP28).

"Investment in the gas sector can be appropriate to help address potential market shortfalls provoked by the crisis, subject to clearly defined national circumstances, and if implemented in a manner consistent with our climate objectives and without creating lock-in effects," the ministers said in the communique.

Critical minerals

The G7 ministers also agreed to a joint plan for critical mineral security, stressing the growing importance of critical minerals to the clean energy transition and the need to prevent economic and security risks caused by vulnerable supply chains.

"We are committed to supporting open, transparent, rules- and market-based trade in critical minerals with traceability, opposing market-distorting measures and monopolistic policies on critical minerals, and promoting dialogues between extraction, producer and consumer countries," the ministers said.

Under a separate "Five-Point Plan for Critical Minerals Security," the ministers called for developing a "plausible forecast" of medium and long-term supply and demand for critical minerals; developing resources and supply chains responsibly; recycling more and sharing capabilities; saving resources through innovations; and preparing for supply disruptions.

Demand is expected to soar for lithium, nickel, cobalt and other metals needed for batteries and electrification technologies. Supply chains to bring the commodities to market face numerous challenges, and refining capacity is heavily concentrated in a few countries.

Many countries have reached one-on-one agreements for mineral cooperation in addition to the broader actions by the G7.

"We should not end up in situation where we're too dependent on one single supplier," EU energy commissioner Kadri Simson told S&P Global Commodity Insights on the G7 sidelines. "That means that we need a network, a wider partnership of trusted partners."

Decarbonization steps

The ministers also agreed on specific steps for decarbonization, including boosting renewables; the use of such carbon recycling fuels as e-fuel, e-methane; halving at least 50% CO2 emissions from G7 vehicles stock by 2035 from 2000 level and proceeding with transition finance, Nishimura said.

The G7 contributes to expanding renewable energy globally and bringing down costs by strengthening capacity including through a collective increase in offshore wind capacity of 150 GW by 2030 based on each country's existing targets and a collective increase of solar PV to more than 1 TW by 2030, the ministers said.