The Group of Seven (G-7), an informal bloc of industrialized democratic countries, announced they plan to promote investments in oil and gas projects to ensure the availability of a steady stream of supply.
The G-7—which is comprised of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States—made the announcement at the end of its May 2016 ministerial energy meeting, which was held in Kitakyushu City, Japan. The G-7 meet annually to discuss issues such as global economic governance, international security, and energy policy.
According to a statement from the Japanese government, the nations will encourage financial institutions to invest in energy projects, even though investments in oil and gas production are expected to fall 18 percent in 2016—after dropping 24 percent in 2015.
As part of the agreement, ministers say they will support changes to the liquefied natural gas industry, including allowing long-term contracts with looser destination restrictions, and they say they will promote the development of natural gas infrastructure, such as pipelines and storage tanks.
Reliable Energy Needed
David Rothbard, president of the Committee for a Constructive Tomorrow, says the G-7 announcement shows its member governments recognize while support for renewable energy sells well with the public, the reality is in order to run an economy, you need reliable sources of energy.
“Nations that tend to go heavy on renewables put their manufacturing base risk,” Rothbard said. “Renewables are unreliable, intermittent, and very expensive.”
Rothbard says electricity prices in Europe—notably in places such as Denmark and Germany, where they rely more on renewables—are very high, resulting in factories now moving to China and developing countries.
“Data continues to accumulate showing limited, if any, benefits flow from using energy created by renewables,” Rothbard said. “If you have a lot of heavy industry and a large fleet of electric cars, the power grid is put at risk if you are a country using a lot of renewables.”
Infrastructure is also important for fracking and natural gas extraction, Rothbard said.
“You have to have pipelines and delivery [and] other means to get the energy to where it needs to be, so support from the G-7 nations is very important,” said Rothbard.
Renewables Are ‘Creatures of Government’
Dan Kish, a senior vice president for policy at the Institute for Energy, says renewable energy sources are not reliable.
“If we want on-demand power 24 hours a day, seven days a week when you flip a switch, then we have to have plentiful, reliable energy sources, and renewables aren’t it,” Kish said.
“Wind and solar projects are creatures of government and wouldn’t exist without it,” Kish said.
“In many cases, governments are big talkers when it comes to renewables,” Kish said, “But occasionally everyone sobers up, like what they did at this G-7 meeting, and have a serious discussion about energy.
“Government shouldn’t do anything to discourage investment,” Kish said. “This sends a message to the people in those areas their investments will be safe.
“For instance, a deep-water drilling platform costs up to $3 billion or more, and they are expected to last 20 years, so before you invest that kind of money, you want to know government won’t act to undermine your investment,” Kish said.
Kenneth Artz ([email protected]) writes from Dallas, Texas.