The G7 summit has finished, with world leaders concluding the formal discussions by jointly publishing a formal communique.
Day 3 of the summit was dedicated to climate and nature discussions. The communique sets out that “through global action and concerted leadership, 2021 should be a turning point for our planet as we commit to a green transition.”
Whilst it was undoubtedly a great opportunity for the UK, Cornwall and the South West region to host a global event and showcase all our capabilities there does seem to be a significant gap between the grand rhetoric in the run up and what was been formally agreed and put out in this communique. As we and many other business groups pour over the detail and assess just how far it really takes us, here is our write up of Day 3.
Leaders were joined by Sir David Attenborough over video who appealed to them to take action.
"We know in detail what is happening to our planet, and we know many of the things we need to do during this decade,"
"Tackling climate change is now as much a political and communications challenge as it is a scientific or technological one. We have the skills to address it in time, all we need is the global will to do so."
Efforts to combat the climate crisis feature heavily in the concluding communiqué but green groups and activists have been left disappointed at the lack of detail in plans to promote a green industrial revolution.
What was discussed?
Net-zero energy commitments
A commitment to set net-zero targets for energy generation by 2030, first discussed by G7 Energy and Environment ministers in May, was formalised. Backing these targets was a commitment to end direct government support for new thermal coal generation capacity without co-located carbon capture and storage (CCS) technologies by the end of this year and other “inefficient” fossil fuel subsidies to be phased out by 2025.
While several G7 nations, including the UK, have already pledged to end coal generation before 2030, the pledge is particularly significant for Japan. JapanCoal accounted for 31% of Japan’s electricity generation in the 2019-20 financial year and it is believed to be the world’s second-largest coal supporter, behind only China.
There is also a commitment to stop direct funding for coal-fired power stations in Organisation for Economic Co-operation and Development (OECD) nations by the end of 2021. G7 members will encourage other nations to follow suit on coal.
No stronger targets were put in place to stop the use of coal, oil and gas at home and the G7 stopped short of calling a halt to the exploitation of new fossil fuel resources.
Net-zero roadmaps
The G7 committed to publishing strategies outlining how efforts to deliver a global transition to net-zero will be reached ahead of COP26. Doing so will help streamline negotiations at the summit, with nations able to outline which solutions can be championed as part of new green markets.
“We commit to submitting long-term strategies that set out concrete pathways to net-zero greenhouse emissions by 2050 as soon as possible, making utmost efforts to do so by COP26, the communique states."
The UK has yet to publish a detailed roadmap; a dedicated strategy is expected to be published prior to the COP26.
Biodiversity
The G7 formally agreed to a shared G7 Nature Compact. Notably it commits nations to supporting the target to conserve or protect at least 30% of global land and at least 30% of the global ocean by the end of the decade.
The G7 has also committed to “strengthen their deployment and implementation” of nature-based solutions (NbS), recognising that they can deliver “significant multiple benefits for climate mitigation and adaptation, biodiversity, and people and thereby contributing to the achievement of various Sustainable Development Goals (SDGs)”.
However, the G7 states that these solutions should not replace the “necessity for urgent decarbonisation and reduction of emissions”.
Additionally, the G7 reaffirmed a commitment to the New York Declaration on Forests to end natural forest loss and, building on the Bonn Challenge, restore 350 million hectares of forest by 2030.
$100bn in climate finance
Climate finance was subject to key discussions prior to the G7 Summit, with finance ministers from the nations agreeing to mandate climate reporting.
Developed countries agreed at the United Nations in 2009 to together contribute $100 billion each year by 2020 in climate finance to help poorer countries adapt to climate change. Commitments to climate finance fell short of the $100bn target with just two nations offering firm promises of more cash. Canada doubled its commitment to $4.4bn (£3.1bn) over the next five years, and Germany promised to increase spending by €2bn to €6bn (£5.2bn) a year by 2025.
The G7 confirmed that the financing would come from multiple sources. Ministers called upon Multilateral Development Banks (MDBs), bilateral Development Finance Institutions (DFIs), multilateral funds, public banks, and export credit agencies to “ensure that financial flows from these institutions are aligned with the goals of the Paris Agreement”.
Carbon leakage
Carbon leakage is the risk that tough climate policies will impact the profitability of large carbon emmiters and could cause companies to relocate to regions with less demanding policies.
The leaders said policies to put a price on CO2 will help them decarbonise their economies.
"We acknowledge the risk of carbon leakage, and will work collaboratively to address this risk and to align our trading practices with our commitments under the Paris agreement."
The European Union is due to propose a world-first plan to impose CO2 emission costs on imports of certain polluting goods in a few weeks.
A just transition
Alongside climate change, the key theme of the G7 discussions was the Covid-19 pandemic. It has highlighted the need to create a "just" economic recovery that captures new green markets.
Whilst the G7 stated: "We are steadfastly committed to addressing barriers to accessing finance for climate and nature faced by women, marginalised people, and underrepresented groups and increasing the gender-responsiveness and inclusivity of finance". There was no plan set out to detail how the G7 would enshrine mechanisms to ensure all parts of society can prosper as nations rebuild economies. They reaffirmed support of the Sustainable Development Goals (SDGs), but no specific plans were issued.
Mobility
The communique outlines the importance of tackling emissions from the global transport sector, but unlike a net-zero energy agreement, there is no clear plan to reduce transportation emissions.
The G7 confirmed that it would “intensify efforts in enhancing the offer of more sustainable transport modes”, including encouraging phase-out of traditional passenger vehicles in favour of electric vehicles (EVs) before 2040.
The G7 also pledged to support the “development and adoption of ambitious mid- and long-term measures” to decarbonise from both the International Maritime Organisation (IMO) and the International Civil Aviation Organisation.
Green infrastructure
The G7 agreed on a new “Build Back Better for the World” scheme that has been likened to a climate version of America’s post-war Marshall Plan. It is expected that details of the new initiative will be outlined prior to COP26, and that a key focus will be to boost green infrastructure deployment in developing countries.
Green innovation
Much like green infrastructure, a focus on green innovation was mentioned, but without concrete plans. The G7 noted the importance of the development of the circular economy, as well as electrifications and “comprehensive industrial heat utilisation”, fuel switching and carbon capture, utilisation and storage (CCUS). However, no official ring fenced funding was announced for these technologies.
It is likely that financing for low-carbon solutions will develop nation by nation, rather than through global agreements, with some markets better set up to promote certain solutions – the UK, for example, has a world-leading offshore wind market.
The G7 did acknowledge and welcome the second phase of Mission Innovation, which consists of the European Union and 22 other governments that combined cover around 90% of global public investment into green energy solutions. Mission Innovation members have committed to spurring “affordable and attractive clean energy, accessible to all in this decade”.
Response to the G7 and progress towards COP26:
For many commentators, the G7 lacked actual details on how they would manage to cut emissions, with an absence of specific measures.
Laurence Tubiana - a key architect of the Paris Agreement in 2015 - said: "In the face of a perfect storm of planetary crises - the world's richest democracies have responded with a plan to make a plan."
With a number of commitments still requiring further development, further announcements are expected in the run up to COP26.
The lack of climate finance commitment could pose a threat to COP26 negotiations in Glasgow later this year. Without strong commitments on climate finance, getting support for any COP26 deal from the developing world, who make up the majority of countries at the UN climate talks and who will make or break any deal, there could be an uphill struggle.
Poor countries will argue that the rich world did most to create the climate crisis, but the most vulnerable nations also face rising debt burdens from Covid-19, and have no money to invest in clean energy, low-carbon infrastructure or ways to adapt to extreme weather.
Malik Amin Aslam, climate minister of Pakistan, has already said: “The G7 announcement on climate finance is really peanuts in the face of an existential catastrophe. It really comes as a huge disappointment for impacted and vulnerable countries like Pakistan – already compelled to ramp up their climate expenditures to cope with forced adaptation needs.”
While the G7 cannot pass any laws because it is made up of separate nations with their own democratic processes, the decisions taken will have global effects and implications for business and the economy.
A further piece will follow but we welcome your views on G7 and what has been committed to.
Business West is a BCorp and plans to be Net Zero by 2030. We are working with our members, accross the region and the wider business community to accelerate progress to Net Zero. See Trading to Net Zero.
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