Energy colonialism was on full display at the latest meeting between seven of the world’s richest nations. Recently, the Group of Seven (G7) met in Hiroshima, Japan for its annual summit. There, the climate crisis and the use of fossil fuels were on the table for discussion.
As the Canary reported in part one of this series, critics have pointed out the blatant use of shock doctrine and fossil fuel profiteering in the wake of Russia’s assault on Ukraine. Unsurprisingly, this is fueling destructive gas expansionism in the Global South. In fact, the G7’s policy has already enabled fossil fuel majors to begin developing new liquid natural gas (LNG) production capacity in Africa.
Gas expansionism in the Global South
For example, multiple oil and gas companies (mostly from G7 nations) have restarted previously abandoned LNG projects across the continent. The US’s Exxonmobil and Chevron, the UK’s BP and Shell, Italy’s Eni, and France’s TotalEnergies have significant upcoming LNG projects in multiple countries across Africa.
Echoing this, a coalition of environment and corporate accountability groups found that in 2022, oil and gas companies were developing new LNG terminals in the region. The report Who is Financing Fossil Fuel Expansion in Africa revealed that companies had LNG facilities planned with a combined capacity of 90m tonnes per annum (MTPA). Moreover, it identified that 97% of this was being “built for export”, mostly to Europe and Asia.
Notably, multinational oil companies from G7 nations are developing four of the largest new LNG terminals. These new export facilities in Mozambique, Mauritania, Senegal, and Tanzania will generate over half the new gas capacity, with a combined 48.3 MTPA.
Public financing for fossil gas
G7 governments have also provided public finance to at least two of these facilities to date. The joint Exxonmobil and Eni Rovuma LNG terminal in Mozambique is the largest project at 15.2 MTPA. The US Development Finance Corporation has provided $1.5bn of “political risk insurance” to the project.
Meanwhile, the second largest project is French TotalEnergies’ Mozambique LNG, at 13.1 MTPA. Multiple foreign governments have funded the terminal. This includes $11.65bn from four nations in the G7.
Oil Change International found that between 2020 and 2022, the G7 provided fossil fuel projects with international public finance to the tune of $73.5bn. This was over two and a half times the amount they directed towards clean energy.
The largest single sub-sector of this financing was fossil gas. G7 nations funded the development of fossil gas by $10bn a year. That’s 28% of the total for fossil fuels as a whole. Significantly, they financed two thirds of this through LNG projects.
While G7 identified that it had directed 70% of this to wealthier G20 nations, it noted that:
Where G7 public finance for fossil fuels does flow to low-income countries, this often supports exports rather than domestic energy access.
In other words, the G7’s public finance of LNG capacity in places like Africa has historically focused on facilitating resource drain from the Global South to the Global North.
Pollution and soaring energy prices
Executive director of Center for Energy, Ecology, and Development (CEED) in the Philippines Gerry Arances said that the G7 fossil gas decision would have huge ramifications for climate-vulnerable communities in the Global South:
They cannot claim to be promoting development while subjecting our people to decades more of pollution and soaring energy prices.
Essentially, public finance to expand LNG will place the heavy pollution costs of oil and gas extraction on Global South communities. Meanwhile, it will do little to help those same communities out of energy poverty.
For example, the offshore oil and gas industry in Mozambique has decimated the northern Cabo Delgado region. The Who is Financing Fossil Fuel Expansion in Africa report stated that in the last decade:
the industry has left thousands of people displaced and without livelihoods, ruined the environment and fueled an ongoing violent conflict that has led to thousands of deaths and turned 800,000 people into refugees
Meanwhile, when European nations began scrambling for gas supply beyond Russia, prices soared. In mid-2022, companies hiked gas prices to 1,900 times the cost of their low in 2020. As a result, companies defaulted on contracts with poor countries in the Global South. Instead, they diverted their LNG cargoes to the wealthier, higher-paying nations. Of course, European G7 nations have been among the countries driving this energy supply injustice.
Moreover, fossil fuel firm Eni from G7 member Italy was one of the companies that failed to uphold its contractual obligation with Pakistan. A Greenpeace report explained how Europe’s gas rush compounded the impacts of the climate crisis there:
This arbitrary behaviour of the global gas companies saw parts of Pakistan experiencing planned blackouts of more than 12 hours, during the heatwave of 2022. In January 2023, a breakdown in the grid triggered yet another outage leaving 220 million people without electricity at the peak of winter. The electricity shortage added to the estimated €37 billion in damage caused by catastrophic flooding in 2022, a budget deficit, and a debt load that is bringing Pakistan to its knees.
Once a coloniser, always a coloniser
None of this should come as any surprise. The G7’s rush to support investments in fossil gas shows how the forum’s priority is and always will be its member nations. For all its rhetoric on achieving “a world that is human-centered, inclusive and resilient, leaving no one behind”, its remit remains one of maintaining global economic and political power.
In 2021, director of Global Justice Now Nick Dearden wrote that the precursor to the G7 was founded in 1975:
to discuss the threat to their control of world energy markets from Middle Eastern suppliers who had turned off the oil taps, and how to deal with their former colonies who were demanding economic liberation from the Western-controlled international economy.
Now, as its current fossil fuel hegemony is under threat, the G7 is using the global financial and trade systems it put in place to subordinate the Global South to its needs once again. This is nothing short of energy colonialism.
Feature image via the White House/Wikimedia, public domain, resized to 1910*1000.
This post was originally published on Canary.
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