G7 Issues Important Statement On Energy Development, Environment

Despite protests from environmental groups, the Group of Seven (G-7) countries (Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States) have endorsed making investments in natural gas. In a communique issued on June 28, the countries said, “[W]ith a view to accelerating the phase out of our dependency on Russian energy, we stress the important role increased deliveries of [liquified natural gas] can play, and acknowledge that investment in this sector is necessary in response to the current crisis.”

Regarding Russian oil, the G-7 leaders pledged that they “will consider a range of approaches, including options for a possible comprehensive prohibition of all services, which enable transportation of Russian seaborne crude oil and petroleum products globally, unless the oil is purchased at or below a price to be agreed in consultation with international partners.

According to several news reports, those actions could include a cap on the price of Russian oil exports. Politico said U.S. Treasury Secretary Janet Yellen is one of the “chief” proponents of that idea, which is seen as an important alternative to an outright ban on Russian oil sales that would curtail global supply and could send global energy prices even higher.

Other presidential advisers also seem to support the idea. White House National Security Adviser Jake Sullivan told reporters last week, “If you merely try to reduce flows and not reduce price, you have certain impacts on the energy market that are averse, whereas if you reduce price … you might be able to actually maximize your overall objectives of both depriving revenues to Putin and keeping [the] energy market stable.”

G-7 leaders pledged to form a “Climate Club” by the end of 2022 that will develop ways to create a “highly decarbonized” road sector by 2030 and a “fully or predominantly decarbonized” power sector by 2035. Read the full communique here.

In related news: The European Union has reached a draft agreement to support more stringent climate rules that would eliminate emissions from new vehicles by 2035. The deal paves the way for final negotiations with the European Parliament.