G7 climate ministers challenge Japan’s energy strategy

G7 member states have pushed back on the viability of a central part of Japan’s climate strategy, according to an environment ministers’ draft communiqué seen by the Financial Times, in a challenge to Tokyo’s efforts to shape Asia’s transition to cleaner energy.

The scrutiny of Japan’s climate plans comes ahead of a meeting of G7 environment ministers in Sapporo this weekend, where representatives will attempt to align the world’s most advanced economies in the fight against global warming.

Japan has sought to play a central role in financing the shift towards cleaner forms of energy in Asia, which accounts for roughly half of global carbon emissions and is home to the world’s youngest generation of coal power plants.

But Tokyo’s climate plan, known as GX, has been criticised by officials and environmental groups because of its bet on ammonia as a low-carbon energy source alongside gas or coal to reduce emissions from existing power plants.

G7 member states question the viability of ammonia in Japan’s ambitions to facilitate Asia’s transition to net zero emissions. Although ammonia itself is not a greenhouse gas, its production relies heavily on fossil fuels and is not yet commercially viable.

Scientists have warned that coal needs to be rapidly phased out if the world is to meet the Paris agreement, where countries agreed to limit global temperature rises to below 2C and ideally 1.5C.

For resource-poor Japan and other Asian countries that depend on coal for power generation, however, the chemical offers the attractive possibility of using existing fossil fuel infrastructure.

The UK, France and Canada have pressured Japan to soften language around the promotion of ammonia and hydrogen as low-carbon fuels in a draft of the G7 environment ministers’ communiqué.

The draft acknowledged that some countries are considering using hydrogen and its derivatives, including ammonia, to achieve “zero-emission thermal power generation”. 

But the UK, supported by France, asked to add that such use “should only be pursued where it can be demonstrated to be aligned with” the 1.5C target for curtailing rising temperatures by 2050. Global temperatures have already risen at least 1.1C since pre-industrial times.

Canada, meanwhile, objected to describing hydrogen and ammonia as “effective” emission reduction tools and pushed to describe them as “potential”. 

Both requests appear to have been rejected, and the latest draft says some countries are considering the use of hydrogen and its derivatives “aligned with a 1.5C pathway”, in a potential win for Tokyo, which was backed by Germany.

According to the draft text, the UK proposed largely phasing out domestic coal by 2035, but Japan resisted this.

Alden Meyer, senior associate at E3G, a climate consultancy, said this weekend’s meeting was important for setting a global strategy to tackle global warming but warned the draft showed G7 countries were making little progress on agreeing how to achieve this.

Japanese companies have signed deals with power utilities in Thailand, Indonesia, Malaysia and the Philippines to replace some coal at power plants with ammonia.

According to TransitionZero, a UK think-tank, co-firing a power plant with 20 per cent ammonia and 80 per cent coal will fail to cut emissions enough to reach the net zero targets.

“In fact, emissions from a 50 per cent ammonia, 50 per cent coal co-firing rate is similar to emissions from gas in all four countries,” researchers said.

Kimiko Hirata, executive director and founder of Climate Integrate, a non-profit organisation, warned: “[Japan’s] Green Transformation, which is part of the draft text, sounds nice and not harmful. However it is uniquely defined by Japan and promotes industry rather than decarbonisation.”

Some of the biggest backers of ammonia are also Japan’s largest emitters of carbon dioxide, such as Mitsubishi Heavy Industries, heavy machinery maker IHI and Jera, the world’s largest LNG buyer.

MHI reported in December that its “Scope 3” emissions — which come from a company’s suppliers and customers — stood at 1.6bn tonnes of CO₂. Environmentalists point out that the figure is 37 per cent higher than Japan’s national emissions and just shy of that of Saudi Aramco.

The industrial conglomerate will aim to lower those emissions by reducing its reliance on fossil fuels and shifting to greener technologies such as hydrogen and carbon capture, and storage. It also plans to commercialise ammonia co-firing plants in 2030.

Action Speaks Louder, an Australian climate group, said MHI’s target of reaching net zero emissions by 2040 was “relatively ambitious”, but the company was relying on “unproven technologies”.