Meeting this week in the shadow of the Bavarian Alps, the Group of Seven (G7) leading industrialized nations sent out strong signals that the world needs to shift away from fossil fuels this century while enhancing finance for those most vulnerable to the impacts of climate change.
These signals are packed into the G7 Declaration, with messages for the global economy and the Paris Climate Summit this December, where an international climate agreement for 2020 and beyond will be made final.
Decarbonizing the Economy
For the first time ever, the G7 rallied behind a long-term goal to decarbonize the global economy over the course of this century. They acknowledged the need to cut greenhouse gas emissions, citing the most recent assessment from the Intergovernmental Panel on Climate Change, which calls for a 40-70 percent reduction in greenhouse gas (GHG) emissions from 2010 levels by 2050 to have a decent chance of keeping global temperature rise to within 2 degrees C (3.6 degrees F) over pre-industrial times.
The leaders made it clear they prefer the upper end of the 40-70 percent emissions reduction range, and that this global target must be shared by all countries. The G7 commits to do its part to meet this goal by striving to transform the energy sector by mid-century and to put long-term, national low-carbon strategies in place.
The Declaration also includes signals on what the priority issues are for leaders in the Paris agreement, putting a major focus on strong provisions to increase transparency and accountability. If countries seriously want to shift to a net-zero carbon economy—one that can operate without making a net contribution to GHG emissions in the atmosphere—they need to know what their competitors are doing and measure their own efforts. The G7’s call for “binding rules to track progress towards achieving targets” would be a good step along that road.
There is also a short-term signal that countries will get more ambitious over time. The Paris agreement offers an opportunity for countries to commit to a continuous cycle of improvement in cutting carbon from their economies, increasing ambition every five years. The G7 is signaling that this increasing ambition is in line with the goal to keep global average temperature rise to within 2 degrees C (3.6 degrees F), and is an important priority.
Beyond the G7 leaders’ commitment to climate action, the Declaration reaffirmed a promise made in 2009 at the Copenhagen climate meeting to jointly mobilize $100 billion dollars a year by 2020 from public and private sources. An agreement on achieving this goal is essential to build trust and will be an important part of the finance package to be discussed at Paris. Recent analysis by WRI shows this goal is politically achievable if it broadens its range of climate finance sources and scales up all public finance. G7 countries pledged to continue to provide and mobilize increased funding from public and private sources, and recognized the role of multilateral development banks in helping countries transition to low carbon economies. The G7 countries will need to provide more public finance, and Germany’s recent announcement to double its climate finance to 4 billion Euros by 2020 is a welcome step forward. The public sector plays an essential role in the mobilization of private sector finance needed to achieve the low carbon, climate-resilient transformation.
Two real-world efforts announced by the G7 are particularly encouraging: the intention to increase by up to 400 million the number of people in developing countries with access to direct or indirect insurance for disaster risk reduction, and the plan to accelerate access to renewable energy in Africa and other regions.
The Declaration calls for the incorporation of climate mitigation and resilience considerations into development assistance and investment decisions. While more can be done on making all investments compatible with the 2 degrees C (3.6 degrees F) goal and screening them for climate risks, this is encouraging.
The G7 emphasized its commitment to eliminate inefficient fossil fuel subsidies. In 2009, the G20 (a group of 20 major economies that includes the G7) agreed to phase out and rationalize over the medium term inefficient fossil fuel subsidies while providing targeted support for the poorest. But progress has been extremely slow. The International Monetary Fund estimates that pre-tax consumer and producer subsidies totaled $541 billion in 2013.
With less than six months to go before the Paris summit, G7 leaders made important strides, but more will need to be done. We will look for these major economies to keep climate action moving toward a low-carbon, climate-resilient world.