UPDATE 2-G7 ministers to offer cautious backing of Japan's climate strategy - draft

(Adds detail on ammonia co-firing, Japan comment) By Kate Abnett and Makiko Yamazaki BRUSSELS/TOKYO, April 14 (Reuters) - Climate ministers from the Group of Seven countries are set to agree that ammonia could be used to cut emissions from fossil fuel-based power plants, but only under certain conditions - offering a cautious endorsement of G7 host Japan's climate plans. The latest draft statement for the meeting of G7 ministers on April 15-16 in Sapporo, Japan, said: "some countries are exploring the use of low-carbon and renewable hydrogen and its derivatives in the power sector to work towards zero-emission thermal power generation." The draft, seen by Reuters, said this strategy must comply with numerous conditions. It must be aligned with reaching a largely decarbonised power sector by 2035, comply with limiting global warming to 1.5C, and avoid emissions of nitrous oxide and other pollutants, the draft said. Japan is testing co-firing ammonia - a compound made of nitrogen and hydrogen - in its coal-fuelled power plants as a way to reduce CO2 emissions, and has sought the endorsement of other G7 countries for the plan. Previous drafts of the statement, seen by Reuters, showed Japan's push had hit resistance from other G7 countries, who refused to back the use of hydrogen and ammonia in power generation without multiple caveats. Britain, backed by France, had proposed adding that ammonia could only be used if it is aligned with largely decarbonising the power sector by 2035 and curbing global warming to 1.5C, the limit that would avoid its most severe impacts. An official from Japan's Industry Ministry dealing with international affairs declined to comment on the draft statement, saying negotiations are ongoing. The plan to expand ammonia co-firing aims to cut the climate impact of Japan's existing power plants running on coal - the fossil fuel with the highest CO2 emissions. However, the plan has faced criticism from some analysts, who suggest Japan should instead use the limited supply of low-carbon ammonia in sectors like fertiliser production, which lack other options to cut CO2. Energy analysts BloombergNEF said last year ammonia-coal co-firing was too expensive to be widely used in Japan's power sector, and that a coal plant running on up to 50% ammonia would still emit more CO2 than a gas plant.
(Reporting by Kate Abnett, Makiko Yamazaki; additional reporting by Yuka Obayasha; Editing by Kim Coghill and Susan Fenton)