What the G7’s fossil fuel subsidies announcement means for community energy and renewables


Friday saw a very significant announcement come from the G7 Summit in Japan. Leaders from the UK, US, Canada, France, Germany, Italy, Japan and the EU have come together to agree a deadline for the ending most fossil fuel subsidies. This included the statement that government support for coal, oil and gas should end by 2025.

This is fantastic news.  As the Leaders’ Declaration, issued at the end of the summit, put it, “[E]nergy production and use account for around two-thirds of global greenhouse gas emissions, [and] we recognise the crucial role that the energy sector has to play in combatting climate change.”

G7 Summit in Japan

Credits: G7. Link.

Here in the UK, the current government has already agreed to phase out electricity generated by coal within the same timescale. This G7 announcement helps take this much further and will, I feel, help further accelerate the adoption of renewables. Importantly, this acceleration will not only come from the major energy companies but, by enabling a more level playing field, also from the fast-growing, but still-young community energy sector too.

If we look at solar, which makes up the significant majority of our bencoms’ community energy generation capacity (and 100% of open investment opportunities), these installations have increased rapidly as the cost of solar energy generation continues to fall. Indeed, 99% of the UK’s solar capacity have been added in just 5 years. But things are changing and many of the subsidies that renewables received were cut significantly at the end of last year.

While a little earlier than I might have hoped for, this isn’t necessarily a bad thing. The cost of solar generation has fallen spectacularly as materials science improves, and this trend will continue for many more years. We’re just five, potentially even as little as three years away from having grid parity. But gas – which is subject to a very volatile market – and other fossil fuels are still subsidised.

For example, the Government’s capacity market scheme last year awarded £175m of consumer-funded subsidies over 15 years to add 650 megawatts of capacity from small diesel engines. Indeed, we are the only G7 nation increasing fossil fuel subsidies. And this is despite gas being proclaimed by the UN’s IPCC panel as just a short term fix to cut CO2 levels.

This G7 announcement helps to change this and ensure the future of clean energy can continue strongly. It also gives investors added faith that there will be a level playing field for solar, wind, and other low-cost renewables that can easily provide the capacity needed to meet our needs.

And this level playing field will also boost  community energy, which has the power to transform the way energy in the UK is controlled and owned.

Credits: BWCE. Link

Worldwide, investor confidence in the renewables sector has never been higher. This week’s REN21’s Global Status Report highlighted that more than $285bn (£196bn) of investment in clean energy was made last year. This is a record and adds 147GW of new capacity globally.

But ultimately, the G7 report gives another piece of good news to our community energy generation partners – like BWCE, BEC and Orchard. These community enterprises have been working very effectively to raise investment for new community energy projects, add renewables capacity, and return a significant proportion of their profits into local socially beneficial projects. And this is giving strong returns for investors too, BWCE, for example, recently announced that it had returned 7% to its shareholders for each of the past four years.

To find out information on current community energy investment opportunities click here.