G20 Summit 2023: Green Financing, Energy Transition — Key Climate Issues In Focus

G20 Summit 2023: The key climate issues in focus at the G20 summit are green financing, fossil fuel phaseout, and renewable energy transition.

India wants to become a net-zero economy by 2070, produce 500 Gigawatts of renewables by 2030, and produce 311 Gigawatts of solar energy and 82 Gigawatts of wind energy by 2031-2032. Renewable energy is a key climate issue in focus at the G20.

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G20 Summit 2023: The 18th G20 (Group of Twenty) Summit will be held in New Delhi from September 9 to 10, 2023, and will focus on key climate issues. India currently holds the G20 Presidency. The G20 theme this year is "Vasudhaiva Kutumbakam" or "One Earth • One Family • One Future", and has focused on the concept of 'Lifestyle for Environment' (LiFE). While the agenda emphasises climate change, geopolitical tensions due to the Russia-Ukraine War, the US-China rivalry, and China President Xi Jinping and Russia President Vladimir Putin deciding to skip the G20 summit may serve as hindrances to attaining a unified agreement on important climate issues such as energy transition, sustainable development goals, and green financing. 

The year 2023 is the second warmest on record so far, and August 2023 is the second hottest month ever. Also, the boreal summer 2023 is the warmest Northern Hemisphere summer since 1940. Sea surface temperatures have reached record high levels. If these patterns continue, the year 2023 will soon become the hottest on record. These extreme weather events call for more stringent climate policies.

At the 28th United Nations Climate Change Conference (COP28) to be held in the United Arab Emirates (UAE) later this year, major economies will be urged to implement plans to ensure that fossil fuel phaseout is accelerated, renewables are tripled, and new levels of climate finance are raised.

Despite the fact that India's G20 Presidency has improved the global status of the country, the absence of Xi and Putin may cloud the success of the Summit. 

The Summit is a conclusion of all the G20 meetings that have occurred throughout the year, and at the end, a declaration will be adopted. At the environment and climate ministers' meetings, ministers or their deputies from different nations agreed to unanimously commit themselves to creating a sustainable and resilient future, and focused on areas such as land degradation, blue economy, circular economy, biodiversity loss, and water resource management. However, all these meetings issued summary documents, and not an official announcement. This is because the leaders did not reach a consensus due to a lack of clarity of important issues like climate finance, energy transition, and phaseout of fossil fuels, among others. 

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Despite this, it is hoped that a consensus will be reached at the G20 Summit, and all the documents discussing key climate issues are likely to be annexed to the G20 New Delhi Leader's Declaration 2023. 

The following are the key climate issues in focus. 

Green finance

Financial resources or instruments intended to support climate action, protect the environment, and ensure sustainable development activities are referred to as green finance or climate finance. Green finance is important because it not only helps address climate change, but will also allow a country to make the investments needed to transition to a low-carbon global economy. 

Green financing can be done in the form of grants and donations, loans, and green bonds, which are debt securities designed to support environmentally-friendly activities.

Green financing helps in mitigation, climate change adaptation, and resilience-building. 

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At the 2023 G20 Summit, wealthier nations can donate trillions in investments to support developing countries to carry out energy transition. According to COP28's letter to the Parties, annual investments in climate action must be increased by more than $2.4 trillion annually by 2030. This accounts for two per cent of the global GDP. 

On September 5, the G20 finance deputies discussed debt distress (a situation where a country is unable to fulfil its financial obligations and its debt needs to be restructured) of vulnerable nations. India expects to be a part of discussions on debt distress at COP28. 

US President Joe Biden will attend the G20 Summit, and discuss a range of collective efforts to tackle global issues such as clean energy transition and combating climate change, mitigating the economic and social impacts of Russia's War in Ukraine, and increasing the capacity of the multilateral development banks, including the World Bank, to fight poverty, according to the White House. 

Fossil Fuel Phaseout

Saudi Arabia is believed to be delaying its fossil fuel phaseout. According to a Reuters report, the European Union (EU) will seek a deal at COP28 to phase out fossil fuels. 

A report by the International Institute for Sustainable Development said that public financial flows to fossil fuels in G20 countries reached a record $1.4 trillion in 2022.

In India, fossil fuel subsidies have declined by 76 per cent between 2014 and 2022.

However, fossil fuel subsidies in India are more than four times the subsidies for renewables and electric vehicles. 

Coal Phaseout

The G20 is home to 93 per cent of the world's operating coal capacity. Despite this, the G20 meetings held so far have not discussed the issue of coal. Therefore, an agreement at the Summit on coal phasedown is extremely important. 

In 2015, coal power accounted for 43 per cent of G20 electricity. This was reduced to 39 per cent in 2022. 

At the 2022 G20 Summit held in Bali, an agreement was signed to phasedown coal. Therefore, India hopes to persuade the Heads of State and Government to commit to phasing down fossil fuels, including coal. It is important that this unified agreement makes it to the final text. 

The per capita coal power emissions of several G20 Nations have increased. This can be reversed only through a coal phase down. 

Renewable energy

India is the third-largest solar panel manufacturer in the world, and is making good use of solar and wind energies for electricity generation. The country wants to become a net-zero economy by 2070, produce 500 Gigawatts of renewables by 2030, make 50 per cent of its energy mix non-fossil fuel by 2030, and produce 311 Gigawatts of solar energy and 82 Gigawatts of wind energy by 2031-2032. 

According to an analysis by Ember, an energy think tank, wind and solar energy in G20 countries reached a combined share of 13 per cent of electricity in 2022. 

Expectations from the 2023 G20 Summit

In 2021, India's Prime Minister Narendra Modi announced that the country will become a net-zero economy by 2070. This will be possible if greenhouse gas emissions are cut, and fossil fuels are phased out. 

According to a report titled 'Competing in the new zero-carbon industrial era', written by Neil Makaroff and Linda Kalcher of Strategic Perspectives, a pan-European think tank, India, at the G20 Summit, is expected to push for the global green development agreement which will include climate finance, Lifestyle for the Environment (LiFE), acceleration of progress on sustainable development goals, circular economy, energy transitions, and energy security.

The G20 summit is expected to focus on strengthening global commitments to address climate change, and discussions on enhancing climate research collaboration, sharing data and models, and fostering innovation to improve climate projections and adaptation strategies are likely to be held, Dr Anjal Prakash, Clinical Associate Professor (Research) and Research Director, Bharti Institute of Public Policy, Indian School of Business, told ABP Live. “Deeper scientific insights into the impacts of climate change on various sectors and regions are crucial for informed policymaking. The Summit may also emphasise the role of science in guiding nations towards more ambitious emissions reduction targets in line with the Paris Agreement.”