Meeting in Japan, the Group of Seven nations recently set new collective targets for solar power and offshore wind capacity, agreeing to speed up renewable energy development and move toward a quicker phase-out of fossil fuels. They pledged to collectively increase offshore wind capacity by 150 gigawatts by 2030 and solar capacity to more than 1 terawatt. They did not endorse a 2030 deadline for phasing out coal and allowed for continued investment in natural gas because it is needed to address potential energy shortfalls. They agreed to accelerate “the phase-out of unabated fossil fuels” – the burning of fossil fuels without carbon capture technology – to achieve net zero carbon in energy systems by 2050 at the latest. They also agreed to prioritize “concrete and timely steps” towards accelerating the phase-out of “domestic, unabated coal power generation”, as a part of a commitment made last year to achieve at least a “predominantly” decarbonized power sector by 2035. G-7 countries account for 15 percent of the world’s operating coal capacity and that share is declining.
Other Outcomes of the Meeting
Canada, Britain and some other G7 members committed to phasing out unabated coal-fired power by 2030. Japan, which depends on imports for nearly all its energy needs, wants to keep liquefied natural gas (LNG) as a transition fuel for at least 10 to 15 years as investment in the gas sector “can be appropriate” to address potential market shortfalls provoked by the crisis in Ukraine, if implemented in a manner consistent with climate objectives. The group targeted 2040 for reducing additional plastic pollution to zero, bringing the target forward by a decade. G-7 nations already contribute very little to ocean plastic pollution.
The G-7 reaffirmed the growing importance of critical minerals for the clean energy transition and the need to prevent economic and security risks caused by vulnerable supply chains, monopolization, and lack of diversification of existing suppliers of critical minerals. They left nuclear power as an option, saying those countries that opt to use nuclear energy recognize its potential to provide affordable low-carbon energy that can reduce dependence on fossil fuels and committed to support the development and construction of nuclear reactors, such as small modular and other advanced reactors with advanced safety systems.
The group did not endorse Japan’s strategy of burning hydrogen and ammonia alongside fossil fuels to reduce carbon emissions. Rather, it noted that “some countries are exploring” the potential of hydrogen fuels. Attempts to commit to halving emissions from vehicles by 2035 also did not get agreement. Rather, the G-7 countries reaffirmed their commitment to a highly decarbonized road sector by 2030.
In summary, they achieved little of substance in a world upturned by energy and economic chaos in part created by G-7 nations pushing renewable and expensive energy in their pursuit of the U.N.’s Paris Accord.
Wind and Solar are Not the Panacea
With Russia’s invasion of Ukraine, the G-7 countries claim that energy security is an important issue, yet they are pushing unreliable and intermittent wind and solar power. Britain and Germany found that low wind speeds ended in either more fossil fuel usage and/or asking homeowners to reduce consumption, which should be unheard of in powerful, wealthy countries. Relying on wind and solar power and ensuring back-up power is expensive as Britain has found out. The British electric-grid operator spent £4.2 billion ($5.2 billion) in 2022 balancing supply and demand on its grid (£150 ($185) per household) – a record amount. With current technology, it is impossible to store large amounts of electricity for long. Therefore, the grid must balance supply and demand on a minute-by-minute basis, and the task becomes expensive as renewables take up a greater share of installed generation. When the wind is not blowing or the sun is not shining, the grid operator must occur high fees buying emergency power from conventional generators made less economic by operating at less than efficient levels due to renewables enjoying purchase preferences.
These costs constitute a growing burden on British households and businesses that have seen their bills skyrocket by up to 230 percent over the past year, prompting the government to step in with subsidies to reduce the amount people must actually pay directly out of pocket. The annual balancing cost was about £1.2 billion ($1.5 billion) in 2019. This is a monetary measure of how unreliable renewable supply is, and how much more consumers have to spend to keep electricity flowing into their households, particularly after much of their tax money has gone into subsidizing the installation of new windmills and solar panels.
Despite that, the EU and the UK target are targeting 110 gigawatts of offshore-wind capacity by 2030–more than triple the current level. But since there were almost no new investments made last year and all tenders for subsidies in Germany were under-subscribed, that goal seems unlikely. Further, Germany is building 25 gigawatts of natural gas as it retired its last three nuclear reactors on April 15—its cheapest reliable power source. As Eon closed its nuclear reactors, it announced a 45 percent increase in prices for customers with average consumption beginning June 1. Complying with Green’s demands has proven very expensive for consumers.
Politicians claim that wind and solar are cost competitive but to unclog renewable investment, they need to increase subsidies or let monthly bills for homes and businesses rise since electricity rates are not keeping pace with construction costs. In Europe, governments have set aside 768 billion euros ($811 billion) to shield companies and consumers from price increases, much of which is attributable to their energy plans.
In the United States, where offshore wind is just getting off the ground, wind developers are finding that their already very high costs are insufficient for development and are renegotiating their agreements with utilities where they can. Offshore wind developers are facing financial challenges due to supply-chain problems, rising interest rates and inflationary pressures making the projects far more expensive to build. The Biden administration set a target for the United States to develop 30 gigawatts of offshore wind power by 2030, which will be difficult, if not impossible, to achieve if cost and supply issues persist. Biden is even proposing to allow a foreign offshore wind company kill 42 whales, 2,678 dolphins and 1,472 seals while conducting a survey for turbines. Marine mammal deaths are stirring opposition to offshore wind farms as the toll mounts.
According to the Energy Information Administration, before generous federal tax credits and other federal and state support, the levelized cost of electricity from new offshore wind is estimated at $136.51 per megawatt hour. But, even if new natural gas pipelines had to be constructed, natural gas could provide reliable electricity in place of these offshore wind turbines for a fraction of the cost. In addition, jobs from natural gas production and use do not have to be subsidized by taxpayers because the gas companies do not rely on government support for continued operation. Rather, they make profits and pay taxes instead of consuming them.
Wind and solar as well as electric vehicles need enormous amounts of critical minerals for their manufacture, yet the Biden administration is doing all it can to depress mining development in the United States. According to the United States Geological Survey, the United States is endowed with critical minerals. Yet, the Biden Administration is revoking leases, delaying permits, and listing plants as endangered species to hinder critical mineral mine development to please its environmental friends. To show that the administration is not in China’s clutches for critical minerals, despite that country’s dominance, the Biden administration is undertaking agreements with its allies to allow them to qualify for tax benefits under the Inflation Reduction Act, despite the fact that these are trade agreements that should be approved by Congress.
Politicians claim renewables enhance energy security and are competitive with traditional technologies, but escalating balancing costs tell a different story as back-up power is required for wind and solar power when their resource is not available. Those costs to ensure reliability are not trivial. Yet, the G-7 is asking for 150 gigawatts of offshore wind—one of the most expensive generating technologies, according to the Energy Information Administration — to be built by 2030 and more than 1 terawatt of solar. They are calling for this at a time when the IEA says China accounts for over 80 percent of the world’s supply chain for solar and predicts they will control over 95 percent in the coming years. Consumers should expect electricity costs to increase in the G-7 nations as their politicians commit to more and more renewable energy and electrification to get to a net zero carbon world, as China consumes ever-growing amounts of coal to make those products for export to the G-7.