Vol 1, Sept 2023 | The G20 Special Issue

The adoption of a joint declaration in itself represents an important win for the G20 presidency and Indian diplomacy.

The ecstatic reception of the G20 New Delhi Leaders’ Declaration begs the question- where does the normative end, and the superlative begin? Read more

The adoption of a joint declaration in itself represents an important win for the G20 presidency and Indian diplomacy.

The ultimate G20-Climate wrap

The ecstatic reception of the G20 New Delhi Leaders’ Declaration begs the question- where does the normative end, and the superlative begin?

And so it is done.

After almost a year of drumming up, the Indian presidency of the G20 culminated this past weekend in New Delhi. Leaders and government delegations from around the world descended on the Indian Capital to try and tie up months of negotiations with a joint declaration. In that respect, the G20 Leaders’ Summit delivered. For the first time under the Indian presidency, which has had to constantly battle differences in the group on the matter of the conflict in Ukraine, consensus was achieved and against the odds, the New Delhi Leaders’ Declaration was adopted by the G20 on Saturday.

The group, which represents about 85% of the world’s GDP, has its foundations in economic cooperation. With the entanglements of climate change and economy growing deeper each passing year, engagement of the forum with climate-related economic aspects has also increased steadily.

At the beginning of the year, CarbonCopy had written that the G20 would script a vital part of the climate story of 2023. The Indian presidency, which rightly identified climate change and its implications as a pivotal challenge of humanity, put climate front and centre through multiple dedicated working groups under both the Sherpa and the Finance Tracks. The trio of India’s foreign minister S.Jaishankar, finance minister Nirmala Sitharaman and the G20 Sherpa Amitabh Kant, who presided over the closing press conference, made sure to hammer home the significance of climate. “This is the most ambitious document ever produced when it comes to climate change and climate action (in the G20),” emphasised Kant in response to a question from the press.

So how well does this claim stack up?

Tripling of renewable energy

Immediately upon being handed the baton of the G20 presidency from Indonesia, it was clear that the Indian government would place special importance on the issue of energy transition. Just Energy Transition Partnership (JET-P) arrangements, which were all the rage leading up to the Indian presidency, were quietly shelved in favour of action points that offered greater protections to sovereignty and developmental considerations. As language in the text on energy transitions evolved through successive working group meetings, it became clear that the crux of ambition would come through an express focus on expanding renewable energy capacity and energy efficiency measures. This plan, however, hit a significant roadblock at the G20 Energy Ministers’ meeting held in July in Goa as disagreements emerged on the focus on renewable energy rather than on emission reduction. Notably, Saudi Arabia was reported to have raised strong objections, advocating instead for broader language that included abatement technologies and carbon capture and storage (CCS), the economic and technical viabilities of which are still highly speculative. Being one of the high-stake agenda items of the presidency, the inability to deliver any significant new ambition through consensus at the end was seen widely as a harbinger of a failed G20 season.

These worries, however, were put to rest on Saturday as a compromise was reached on the language, which included soft commitments to triple both RE capacity as well as clean technologies such as abatement. While this might seem like a pedantic distinction, the implications are quite significant. Importantly, the agreed language does not inter-mingle proven technologies for emission reduction such as RE with speculative technologies of abatement and carbon capture. Secondly, it keeps the commitments to triple these separate—so a country is committed to not hold back on RE expansion just because other clean technologies are being expanded, and vice versa. Adding flesh to the motive of expanding clean energy, the target to triple renewable energy was also accompanied by the adoption of a voluntary roadmap to double the energy efficiency of economies. New initiatives on biofuels and green hydrogen were also announced, in line with the Indian government’s strategy of targeted alliances and smaller groupings based on common interests when it comes to energy—first seen in the establishment of the International Solar Alliance (ISA) and the alliance for One Sun One World One Grid.

In a win for Indian foreign policy, the presidency also managed to sustain relevance of LiFE—the mission to improve material and energy efficiency through shifts in lifestyles. The path for emission reductions will inevitably flow through energy efficiency, particularly in developed economies where per capita energy demand and emissions have for decades been several times higher than the global average. If sustained, LiFE could provide a useful raft for the Global South to float discussions on the carbon budget management and carbon inequality.

The inconvenience of fossil fuels

After the Indian delegation provided implicit support for the demand to phase-down all fossil fuels (and not just coal) at COP27 in 2022, speculation was that the Indian presidency could pursue efforts to include similar language in any joint statement issued by the G20. These hopes, however, fell flat as the ministerial meeting on energy transition concluded in July without any agreement to go beyond coal in phase down efforts. 

As expected, the declaration that emerged from the Leaders’ Summit, too, fails to articulate any joint efforts to phase down fossil fuels, instead reiterating previous commitments to phase down unabated coal power and work towards eliminating inefficient fossil fuel subsidies. The text appears to have put heavier emphasis on energy access, maintaining avenues to energy from all sources (as long as they align with national decarbonization strategies) and better targeting of subsidies towards socio-economically backwards and vulnerable populations who need it the most.

A hotly debated matter during the energy ministers’ meeting, timelines for global peaking of emissions and the inclusion of 1.5°-compliant emission reduction pathways were also included in the text, but only as a matter of recognition rather than through any new commitment or target.

The decision to hold back on language targeting fossil fuels comes at a time when subsidies to the fossil fuel industry have been reported by the IMF to have surged to $7 trillion, and during an active expansion of oil and gas capacities around the world.

Climate finance: Validating a mammoth sum

Climate finance, the hot potato of climate action, has only become hotter in recent years. The prolonged inability of the developed world to mobilise $100 billion every year for climate action in developing countries has long been a thorn in the prospect of agreeing any new goal and financing arrangement for the post-2025 period. As the clock runs down, there is once again sharp focus on the true costs of climate change and expenses of action—not least in the G20 tracks dealing with the delivery of climate finance.

Agreeing on new commitments and rules of engagement was always a highly unlikely prospect for a grouping such as the G20. The onus of these tasks belongs in UNFCCC forums. The G20, representing a vast majority of global economic productivity, however, can and does provide important signals on how winds will flow as we move toward the COP28 crunch time. And this, the Leaders’ Declaration did.

The agreed text, does provide important precedence for future negotiations on the quantification and delivery of climate finance. The joint declaration squarely puts its weight behind capital estimates for climate action provided by the UNFCCC Standing Committee on Finance in 2021 – climate change impacts and climate action in developing countries would cost $5.8-5.9 trillion by 2030 and global clean energy deployment in the same timeframe would require $4 trillion. 

An even higher number was suggested by a panel of independent high-level experts in economics constituted by the COP28 Presidency a few weeks ago. The inclusion of these estimates in the G20 declaration provides clear baselines to measure the success of ongoing Paris Agreement negotiations on a New Quantitative Collective Goal and Long Term Finance. While this has come only in the form of recognition and acknowledgement rather than actionable commitments, even this provides further support for distinct baselines for negotiating stances to coalesce around as countries prepare for COP28 in December in the United Arab Emirates. At present, the floor from which the future of climate finance will be negotiated has been set at a relatively paltry $100 bn per year. 

MDB reforms

The convergence of worsening climate impacts and successive economic shocks has unleashed an epidemic of debt distress in developing countries. As the world teeters precariously toward a global recession, alarm bells have started ringing louder and louder warning of unprecedented risks of inflationary debt spirals in several developing and emerging economies. Amidst this, multilateral development banks (MDBs) such as the World Bank and the IMF have drawn a lot of ire. Calls for reform have targeted differentiated lending practices and terms of repayment to developing countries that put them at an inequitable risk of default, particularly when faced with natural disasters and impacts of climate change.

MDB reforms that incorporate climate risks and the costs of climate action were high on the agenda of the G20 tracks negotiating climate finance. While the final declaration heavily emphasises the need for MDB reforms, it stops short of formulating consensus on how G20 countries would engage with the subject at board meetings of respective MDBs, particularly at the WB andIMF. The Indian presidency did circulate recommendations for MDB reforms, aimed at helping countries articulate stances for MDB reform that would facilitate more equitable, climate-aligned financial provisions from such institutions. Incidentally, the recommendations echo the sentiment of the Bridgetown Agenda for financial reform spearheaded by Barbados PM Mia Motley. Agreement among G20 countries on measures to scale up blended finance, establish risk-sharing facilities and bolster the availability of concessional finance will ostensibly pave the path for progressive MDB reforms on the lines of the Bridgetown Agenda. Almost a footnote, a multi-year G20 Technical Assistance Action Plan (TAAP), has also been created to address data related barriers for climate investments.

There is one meeting on the Finance Track scheduled in the next few days, during which the recommendations for MDB reforms are expected to be deliberated further.

Membership for the African Union

After months of floating the possibility of inducting the African Union (AU) as the 21st member of the G20 group, the motion to do so was formally introduced and adopted at the Leaders’ Summit in New Delhi. This is a significant step in more ways than one, particularly when viewed through the lens of the representation of the Global South. This expansion of the G20 will ensure sustained pressure on subjects of climate finance and access to technology, and better alignment with other relevant forums.

Interestingly, the expansion also comes at a time of consensus among the G7 on the validity of trade policies such as cross-border taxes in restricting emissions. The issue of the Cross-Border Adjustment Mechanism for carbon emissions (CBAM), a carbon tax instated by the EU on imported goods and services, was one subject on which starkly opposing views were expressed during the G20 climate and environment ministers’ meeting. With African exports standing to lose competitiveness in several key markets, how the AU’s induction into the G20 influences future deliberations on trade policy will be one issue for which to watch out.

Reading the tea leaves

The adoption of a joint declaration in itself represents an important win for the G20 presidency and Indian diplomacy. The consensus, which appeared out of reach until the last minute due to contrasting views on the conflict in Ukraine, was ultimately forged through deft diplomacy and skilled articulation—no mean feat under the circumstances. The success in building consensus gives credence to India’s claim as a key negotiator and a voice of the Global South, particularly at a time of frosty relations between the West and China. Interestingly, in the immediate aftermath of the Leaders’ Summit, state leaders of the US, EU, Saudi Arabia and India jointly announced the establishment of the India-Middle East-Europe economic corridor that would effectively connect the east to the west — a clear challenge to the China-led Belt and Road Initiative and it’s dominance of supply chains. Even more interesting is the fact that three of countries actively involved inthe corridor are also a part of the newly expanded BRICS. Just as this article was published, news broke that the governments of India and Saudi Arabia had agreed to collaborate on energy and explore integration of power grids through sub-sea cables.

So, is this the most ambitious document produced by the G20 in terms of climate? Probably. But it’s important to remember that the G20 is primarily a forum for economic cooperation and so the standard for comparison, although steadily improving, remains one with relatively low ambition. That for the Indian government, however, will be besides the point.

There is little doubt that the G20 presidency, in spite of the bells and whistles, has showcased the Indian government’s ability to balance developmental and geopolitical priorities with the realities of climate change and the politics of collaborative action. Being a key part now of several alliances and groupings that span all directions, the Indian government’s climate leadership moment may finally have arrived.

As the dust settles on the extravaganza and Delhi returns to normalcy, the narratives that have emerged out of the Leaders’ Summit are what will remain. While actionable commitments on climate in the final declaration are few and far between, the G20 has provided clear signals on the expansion of renewables, the inadequacy of climate finance, the need for reforms in MDBs and other International Financial Institutions and the need to expand the representation of the Global South in key decision-making forums. The real test, however, lies in how this consensus translates when rubber truly hits the road at the board meeting of the World Bank in October and COP28 in December.