A step to the side: the G20’s climate dance

Blog Series: What remains of the G20 Hamburg Summit?
Photo: Pflanzen

Make the finance sector climate resilient

The result of this year’s G20 summit was not a major step forward in solving the climate problem. However, the confrontation with President Trump ended not in a full clash, but rather in a diplomatic climate dance – taking one step back, one step to the side, and one step forward. This presents an opportunity to continue with a climate tango from a new starting point in Argentina in 2018.

The step back

It was certainly a step back that no consensus with the US could be achieved on climate change. This becomes obvious in the Leaders’ Declaration, which contains a full paragraph outlining the (isolated) US position. In addition, the joint G20 paragraph on energy and climate bears the mark of US influence as it focusses on energy rather than on climate. It is generally accepted in the literature that transformation pathways should be guided by emission reductions and energy security issues should be derived from this. However, the US was quite successful in opposing this position by labelling “energy security as one of the guiding principles for the transformation of our energy systems”.

The step to the side

Taking the difficulties with the US position into account, the G19 made an elegant step to the side to let Trump run into isolation. It cannot be stressed enough that this is an important signal showing that the G19 stand together and that “the Paris Agreement is irreversible” for them. It would have been easy for some countries to hide behind the US; however, this was not the case. We can therefore expect that this G19 coalition will also hold in the future. The window of opportunity to join the US in questioning the Paris Agreement is now closed. However, those who think that the US is alone in making progress towards collective climate solutions difficult should be careful. The G19 did not reach a consensus on two concrete milestones: setting a clear end year for phasing out fossil fuel subsidies, and making explicit reference to carbon pricing.

The aim to phase out fossil fuel subsidies is a long-standing issue within the G20 process dating back to 2009. The Engagement Groups of business, think tanks and civil society jointly asked the G20 to agree on a concrete timeline for the phase-out and the German presidency had put forward the year 2025 as an end date. However, no concrete timeline was agreed upon in Hamburg and there has been no progress since the formulation agreed upon at last year’s G20 Hangzhou Summit in September 2016. This is disappointing, and shows that the US was not alone in blocking that topic, but was joined by others, probably Saudi Arabia and India.

Carbon pricing was also an important objective set by the Germany presidency. This was prominently supported by business, think tanks and civil society in Germany as well as at the G20 level. Significant progress has been made on this topic, as carbon pricing was explicitly discussed during the meetings of the G20 Sustainability Working Group for the first time ever. However, the final wording is rather weak and carbon pricing is only implicitly mentioned as one of many “domestic economic and market-based instruments”.

The step forward: G19 Action Plan

A major step forward is the “G20 Hamburg Climate and Energy Action Plan for Growth”, agreed by the G19. This Action Plan has been negotiated under the strong leadership of the German Ministry of Environment and the Ministry of Economy in several iterations during three meetings of the G20 Sustainability Working Group. The document recognises the need to shift from targets to action and from setting goals to implementing measures. The Action Plan focuses on a joint learning process and the mutual exchange of experiences, for example on energy efficiency, on implementing the Nationally Determined Contributions (NDCs), and on developing long-term low greenhouse gas emission strategies.

It is important to note that the issue of finance was placed prominently in the Action Plan. In the run-up to the G20 summit, researchers pointed out that it would be crucial to integrate climate policy with the G20 finance ministers’ agenda. The Action Plan emphasises the need for “aligning finance flows with the goals of the Paris Agreement” and the link between low greenhouse gas emission development strategies and investments in infrastructure. These points related to finance have also been highlighted in one of the T20 policy briefs. The Action Plan also refers to the OECD Report on “Investing in Climate, Investing in Growth”. This report shows that combating climate change and maintaining a prosperous economy can go hand in hand. Furthermore, the Action Plan mentions the report of the business-led Task Force on climate-related financial disclosure, a very important initiative to make the finance sector climate resilient.

Next steps towards a climate tango

The Action Plan lays the groundwork to start a process for sharing good practices and experiences and it will be important to keep an eye on compliance with this Plan. The Carbon Market Platform, which was initiated by the G7, could for example serve as an institutional setting for fostering further dialogue on carbon pricing. And Germany’s presidency is not yet over. Until December an attempt could be made to make more progress towards setting an end date for phasing our fossil fuel subsidies. In addition, on the topic of finance, France’s president Macron announced that he will convene a conference in December with the goal of “taking further action, notably on the financial front„.

If all G19 countries implement the newly agreed Action Plan and take it seriously, the step to the side could become a new starting point to facilitate a more elegant and harmonious climate tango under the Argentinian G20 presidency next year.


Previous blogs that appeared in the series on the outcomes of the G20 Hamburg Summit:

Did the G20 Hamburg Summit advance 2030 Agenda implementation?, by Imme Scholz and Clara Brandi

What remains of the G20 Hamburg Summit?, by Axel Berger

Image: Brigitte Knopf

Brigitte Knopf is Secretary General of the Mercator Research Institute on Global Commons and Climate Change (MCC). She is coordinating member of the T20 Task Force “Climate Policy and Finance”


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