Canada should push the G7 to help end energy poverty

Canada’s hosting of the annual G7 meeting in Kananaskis in mid-June comes at a time when six of the group’s members find themselves offside with the seventh, the United States. Despite that, and to encourage a return to common cause, Canada should be bold and push the group to correct one of its most futile and immoral policies: banning public funding for fossil fuels for the world’s poorest countries. Beyond that, Canada should encourage the G7 to persuade the World Bank and its main funders to go back to making loans for fossil fuel development aimed at decreasing energy poverty.

In 2021, the G7 ended public funding for all fossil fuels. The idea was to promote use of renewable energy so as to help slow climate change. Their decision gave G7 leaders a feel-good moment, but cutting public funding for energy projects only hurts the world’s poorest countries, mainly in Africa. Rich countries can attract private capital to develop their energy resources and electricity grids. Poor countries depend on public finance. No doubt the G7 had a warm and fuzzy moment about renewables but their policy hurt poor people.

Two billion people — again, mostly in Africa — do not have regular access to energy. That frustrates almost every developmental goal: eradicating poverty, enhancing educational opportunities, increasing access to health care and more. Blocking poor countries’ access to fossil fuels doesn’t result in greater use of renewable energy. Renewables are neither cheap nor reliable enough to lift the world’s remaining poor out of poverty — as fossil fuels did for previous generations all around the world.

Without access to reliable, affordable energy, most of the world’s poor will continue to burn wood, dung and other biomass at home to meet their energy needs. These sources create more pollution and greenhouse gas emissions than any fossil fuel and also pose serious health threats. In sum, ending G7 funding for fossil fuel projects doesn’t reduce GHG emissions or pollution but does hurt the world’s poorest people.

And if the G7 countries won’t fund fossil fuels, China will. Beijing fully understands that its involvement in energy production and supply also generates geopolitical influence.

Many developing countries — Tanzania is a good example — are sitting on important energy resources. Because these countries’ domestic markets aren’t big or rich enough to allow for profitable private development, they depend on export and/or public finance. And for many years, resources have simply been stuck in the ground. Unblocking public funding and loans would let the private market get on with the job of supplying energy even to low-paying markets in Africa and elsewhere.

Canada should also push the World Bank and its major donors to encourage loans to the world’s poor for all kinds of energy development, including fossil fuels. The World Bank stopped lending for fossil fuel development in 2019 and for electricity produced from such fuels in 2021. On this issue, Canada and the Trump Administration would clearly agree — a bit of geopolitical harmony the two countries could certainly use right now. New U.S. Energy Secretary Chris Wright is a fervent advocate of poverty reduction in Africa through greater use of fuels like natural gas, a point he made forcefully at a conference he and I attended in Canada last May in Banff.

If Canada is not comfortable with support for development of all fossil fuels, it should at least back loans and other forms of finance for natural gas. Natural gas produces electricity with a low environmental impact, currently providing almost 40 per cent of Canada’s overall energy end-use. There likely is agreement almost right across the Canadian political spectrum for natural gas use in poor countries.

Helping the developing world, especially Africa, unleash its energy sources is consistent with Canada’s traditional policy agenda and spirit. Canada has done a remarkable job unleashing its own energy and natural resources, despite what are often remote and inhospitable locations. Canadian companies have developed world-leading technology to extract these resources while at the same time applying the highest environmental standards and labour protections. Canada should turn its oil and gas sector’s can-do spirit toward helping Africa’s and the rest of the world’s poor develop their energy resources and lift themselves up from poverty.

Prof. Shaffer is a senior advisor for energy at the Foundation for Defense of Democracies (FDD) think tank and a senior fellow at the Atlantic Council’s Global Energy Center in Washington, DC.