Germany pushes for G-7 reversal on fossil fuels in climate blow

Germany is pushing for Group of Seven nations to walk back a commitment that would halt the financing of overseas fossil fuel projects by the end of the year, according to people familiar with the matter. That would be a major reversal on tackling climate change as Russia’s war in Ukraine upends access to energy supplies.

A draft text shared with Bloomberg would see the G-7 “acknowledge that publicly supported investment in the gas sector is necessary as a temporary response to the current energy crisis.”

The caveat in the proposal is that such funding is done “in a manner consistent with our climate objectives and without creating lock-in effects.”

The text remains under debate and could change before G-7 leaders hold their summit in the Bavarian Alps starting Sunday hosted by Chancellor Olaf Scholz. The U.K. opposes the proposal, two of the people said. A German government spokesman declined to comment.

A person familiar with the discussions said Italy wasn’t actively opposing the German proposal. Italy, like Germany, is highly dependent on Russian gas. On Friday, speaking during a press conference in Brussels, Prime Minister Mario Draghi said Italy has managed to reduce Russian gas imports from 40% last year to 25% at the moment. This has been possible also by signing new gas deals in countries including Congo, Algeria and Angola.

A government spokesperson said Italy did not support Germany’s idea.

Asked about the proposal on Air

Force One as President Joe Biden flew to Europe, National Security Council spokesman John Kirby said he did not want to preempt discussions at the summit. “Our position last May was that the president was clear that he did not feel like these investments were the right course of action,” he told reporters. “I know of no such change to that policy.”

The debate comes as Europe in particular struggles for alternative sources of fuel to Russian gas. The German government has warned that Russia’s moves to limit supply risk a Lehman-like collapse in the energy markets, with Europe’s largest economy facing the unprecedented prospect of businesses and consumers running out of power.

Germany has responded to the cuts by reviving coal plants and providing financing to secure gas supplies, while continuing with plans to phase out nuclear energy.