The G7 group of most industrialized nations has agreed to decarbonize their respective electricity generating sectors by 2035, the group said May 27 after a meeting of ministers in Germany.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
The meeting was held under Germany's G7 presidency and involved the climate, energy and environment ministers from the US, Germany, France, Italy, UK, Canada and Japan.
"Recalling our agreement in the 2021 Climate and Environment communique, we further commit to a goal of achieving predominantly decarbonized electricity sectors by 2035," the G7 said in a statement.
The agreement is a major milestone in the road to a complete transition to net-zero emissions by 2050.
The group aims to achieve the target by prioritizing power sector transitions that are consistent with the countries' respective 2030 Nationally Determined Contributions under the Paris Agreement.
The G7 will make "concrete and timely steps" toward the goal of an eventual phase-out of domestic unabated coal power generation, it said.
"To this end, we will rapidly scale up the necessary technologies and policies for the clean energy transition," it said.
To do this, the G7 will remove barriers that currently hinder or slow down the expansion of renewable energies, for example planning and permitting procedures, market design, grid operation, fiscal incentives and the investments in infrastructure needed to integrate higher shares of variable renewables.
The G7 acknowledged the International Energy Agency's net-zero scenario, which suggests that G7 economies invest at least $1.3 trillion in renewable energy, including tripling investments in clean power and electricity networks by 2030.
Despite the warm words from the G7 on more ambitious climate action, regulated CO2 emissions in Europe surged by 7.3% in 2021 compared with 2020 levels, as economies rebounded from the pandemic lockdowns while very high natural gas prices brought more coal plants into the money for power generation.
Overall CO2 emissions under the EU Emissions Trading System fell by about 35% between 2005 and 2019, according to European Commission figures.
Expansion of carbon markets
The G7 nations also recognized the "crucial potential" of carbon markets and carbon pricing for incentivizing investments in technology and infrastructure, and nature-based solutions that promote transformation to net-zero emissions.
The member countries will work together, and with partners beyond the G7, to expand the ambitious use of carbon markets and carbon pricing around the world, it said, noting that the revenues from carbon auctions can enable countries to finance further climate action.
The market for voluntary carbon offsets exceeded $1 billion for the first time in 2021, with nature-based carbon credit prices gaining 199% through the year. Nature-based carbon credit prices were pegged at $10.49/mtCO2e on May 26, down from $10.85/mtCO2e May 25, according to Platts assessments published by S&P Global Commodity Insights.
Meanwhile in the regulated markets, carbon prices under the EU ETS are likely to stay supported above Eur80/mtCO2e into early June as lawmakers work to find agreement on market reforms, including a vote in the EU Parliament set for June 6-9, S&P Global Commodity Insights Analytics said in a monthly EU ETS outlook May 19.
The G7 also said significant methane emissions reductions must be achieved globally by 2030, and the group highlighted the need to reduce methane output by 34% by 2030 and by 44% by 2040 compared with 2019 levels – reaffirming the Global Methane Pledge made at the COP26 climate summit in 2021 to cut emissions of the gas by 30% below 2020 levels by 2030.
The G7 also agreed to implement a wider strategy to increase energy security through an accelerated energy transition. The countries aim to achieve this through a rapid expansion of low-carbon and renewable energies and an increase in energy efficiency.
The group emphasized the central role of low-carbon and renewable hydrogen and its derivatives such as ammonia for achieving net-zero emissions and an energy-secure future.
"Ramping up global markets and supply chains for low-carbon and renewable hydrogen and its derivatives is a key enabling step towards a full decarbonization of our economies," the G7 said.
"The G7 have just changed the game for the global electricity transition," said Phil MacDonald, chief operating officer at UK-based energy think tank Ember.
"The science shows that decarbonizing electricity by 2035 is the quickest and cheapest way to net-zero. The past few years have made abundantly clear the many benefits of moving away from fossil fuels, and the G7 are now in agreement that this ambitious target is achievable and desirable," he said in a statement May 27.