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Germany risks breaking gas funds pledge made at UN climate summit

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

Germany is considering the continued funding of gas projects from initial exploration and production through to processing and distribution, said people familiar with the discussions ahead of the next UN climate summit being held in Egypt next week.

Under former chancellor Angela Merkel, Germany was among the 34 countries at COP26 in Glasgow that pledged to end public funding for coal, oil and gas projects overseas.

But in the grip of the energy crisis, her successor Olaf Scholz was considering continuing to fund so-called upstream and midstream production, said the people familiar with the talks ahead of COP27.

Asked whether recent meetings with Senegal about the development of gasfields meant it was reneging on its Glasgow commitment, a senior German official said this week that any future financing would come with strings attached.

“There will be no blind support,” he said. Countries receiving German funds “will have to show that they are abiding by their [climate] commitments” and every potential gas investment would be assessed on its “individual merits”.

Germany believed 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, stressing at all times its transitional nature.”

Those familiar with the discussions said there was a divide about the new overseas funding policy, which is still being developed, within the German government, ruled in coalition with the Green party.

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

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

“We’re not looking at contracts for gas for more than 15 years . . . We have a legally binding greenhouse gas target for 2045. We’ll actually peak our gas use earlier,” she told a Financial Times conference. “The decisions that are made now are really going to decide whether or not the 1.5C [warming] goal stays in sight or not. That is the battle that’s happening, not only in the marketplace, but between companies and countries.”

A weak policy could call into question Germany’s credibility on the international stage and embolden other countries that signed the pledge but had not yet published updated policies — such as Italy — to backtrack, climate change experts said. Backsliding “could risk endangering the national, European and global climate goals”, one person said.

The retreat on phasing out support for gas is likely to add to pressure on EU negotiators at COP27, with the bloc already accused of hypocrisy by poorer fossil fuel-reliant nations.

Upstream gas is particularly contentious since it implies support for new gas exploration and production, while midstream refers to processing and transport. Critics say new upstream projects will do little to resolve the immediate gas shortage.

The evolving German position has echoes of the communique adopted by G7 leaders at a June summit, hosted by Scholz, at Schloss Elmau, Bavaria. Leaders said investments in liquefied natural gas were a “necessary response to the current [energy] crisis” and that government support for gas “can be appropriate as a temporary response”.

The German government also said in September, in the text of a domestic energy package, that as part of its efforts to replace Russian gas supplies with “newly developed LNG supplies” it would seek to tap foreign reserves of gas, though this should happen only “within the framework of our commitments under the Paris climate agreement”.

Discussions with Senegal, where Scholz visited in May, about the development of the west African country’s offshore gasfields are seen as a test case. The two governments are presently in active talks about potential energy investments.

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

But Alden Meyer, senior associate at think-tank E3G, said the continued German support for gas was “an issue of concern”. The COP26 pledge was “one of the strong outcomes from Glasgow . . . If there is some pushback from Germany at this COP that won’t be helpful,” he added.

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