Underachieving on climate

More action needed from G20 on energy transition

The summit in New Delhi last weekend of the leaders of the Group of 20 (G20) nations ended with all those present signing a declaration — an outcome that has widely been viewed as a triumph of Indian diplomacy. This is no doubt a fair evaluation of the summit’s overall success, given the many geopolitical headwinds faced by the Indian presidency. That said, it will also be necessary to evaluate the progress made by the summit, as expressed through concrete deliverables and agreements, in some sectors that are of particular importance to India. One such is climate action, which the Union government has made a centrepiece of both its domestic and foreign policies. While the United Nations Framework Convention on Climate Change, or UNFCCC, is the main multilateral mechanism for the fight against climate change, and the UNFCCC Conference of the Parties, or COP, is the principal location for climate negotiations, the G20 also has a major role to play in coordinating the climate policies of major economies and geoeconomic players.

From that point of view, the summit has not moved the needle much. One line in the New Delhi Declaration that received some attention was the promise to “pursue and encourage efforts to triple renewable energy capacity globally through existing targets and policies”. This is a comprehensive global target that has been urged on the G20 and other bodies by the European Commission, the United Arab Emirates (UAE), and the International Energy Agency. The UAE-based International Renewable Energy Agency, or Irena, has calculated that adding 1,000 Gw of renewable power capacity yearly will be necessary. As of the end of last year, India’s installed renewable energy capacity was 166 Gw; tripling this by 2030 would mean an installed capacity of 500 Gw, which is coincidentally also the government’s current target for non-fossil fuel generation capacity. The New Delhi Declaration thus merely means that India’s renewable energy ambition is to become the norm for the rest of the world.

India may be able to add 50 Gw or so out of existing financial resources, but it would be a stretch. The broader question is whether additional funds can be mobilised for climate action, particularly the energy transition, not just in India but in the larger developing world. Without that, meeting a 1,000 Gw annual target will be well-nigh impossible. It is here that the G20 may have fallen somewhat short. The leaders were certainly made aware of the scale of the financial hurdle; the final declaration includes a reference to an Irena report on “low-cost finance for the energy transition”, which notes that meeting the requirements for keeping global temperature rise lower than 1.5 degrees (the 1850s being the reference point) would require $4.4 trillion a year to be invested in the energy transition. This level of financing will not be available without serious coordinated action by large economic powers. Past promises of $100 billion here and there are clearly insufficient for the scale of the problem. Instead a major realignment of the international financial system that de-risks investment in the energy sector, particularly in the emerging world, will be required. These actions can be taken only by the G20, not the UNFCCC or any other body. It is to be hoped that the Brazil presidency will have the political space to act on these requirements if the Indian presidency found itself constrained by global headwinds.