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Germany risks breaking the promise of gas funds made at the UN climate summit

by SuperiorInvest

The German government’s push to replace the gas it can no longer get from Russia risks breaking a pledge it made at a UN climate summit a year ago to end overseas fossil fuel financing by the end of 2022.

Germany is considering continuing to finance gas projects from initial exploration and extraction to processing and distribution, people familiar with the discussions said ahead of the next UN climate summit in Egypt next week.

Under former Chancellor Angela Merkel, Germany was among the 34 countries at COP26 in Glasgow that committed end public funding of overseas coal, oil and gas projects.

But in the grip of the energy crisis, her successor, Olaf Scholz, considered continuing to fund so-called upstream and midstream generation, people familiar with the pre-COP27 negotiations said.

Asked whether recent meetings with Senegal on gas development meant it had breached its Glasgow pledge, a senior German official said this week that any future funding would be conditional.

“There will be no blind support,” he said. Countries receiving German funds “will have to demonstrate that they are keeping their [climate] liabilities’ and each potential gas investment would be assessed on its ‘individual merits’.

Germany believed the gas was needed “as a transitional energy source,” the official added. “We reserve the right to do what is necessary to make gas available as an energy source, always stressing its transitional nature.”

Those familiar with the discussion said there was a rift over the new overseas funding policy, which is still being developed, within the German government, controlled in coalition with the Green Party.

Angela Merkel at the COP26 opening ceremony in Glasgow in November 2021 © Reuters

Germany’s special climate envoy, Jennifer Morgan, recently said gas was a “bridge with an end” as she prepared to lead negotiations at COP27 on critical aspects of financing climate change damage.

“We don’t track gas contracts for more than 15 years. . . We have a legally binding greenhouse gas target for 2045. In fact, we will peak gas consumption earlier,” she told the Financial Times conference. “The decisions that are made now will really decide whether 1.5C or not [warming] the target remains out of sight or not. This is a battle that is taking place not only in the market, but between companies and countries.”

The weak policy could challenge Germany’s credibility on the international stage and encourage other countries that have signed the pledge but have not yet published updated policies — such as Italy — to back off, climate change experts said. Backsliding “may risk jeopardizing national, European and global climate targets”, one person said.

Backing away from phasing out gas support is likely to increase pressure on EU negotiators at COP27, with the bloc already accused of hypocrisy by poorer fossil fuel-dependent countries.

Upstream gas is particularly contentious because it involves support for new gas exploration and production, while midstream is about processing and transportation. Critics say the new upstream projects will do little to solve the immediate gas shortage.

Germany’s evolving position is reflected in a communique adopted by G7 leaders at a June summit hosted by Scholz at Schloss Elmau in Bavaria. The leaders said that investment in liquefied natural gas is a “necessary response to the current [energy] crisis’ and that government support for gas ‘may be appropriate as a temporary response’.

The German government also said in September in the text of its domestic energy package that as part of its efforts to replace Russian gas supplies with “newly developed LNG supplies” it would seek to draw on foreign gas supplies, although this should only happen “within our obligations under The Paris Climate Agreement”.

Discussions with Senegal, where Scholz visited in May, about developing the West African country’s offshore gas fields are seen as a test case. Both governments are currently actively negotiating potential energy investments.

One EU diplomat said there were concerns about Germany’s push for fossil fuels, but that the country was not alone: ​​”All European countries are doubling down on securing gas and energy supplies at the moment.”

But Alden Meyer, a senior fellow at the E3G think tank, said Germany’s continued support for gas was a “worrying issue”. The COP26 pledge was “one of Glasgow’s strong outcomes. . . If there is any resistance from Germany at this COP, it will not be helpful,” he added.

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