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5 Ways the German G-20 Presidency Can Prevent Backsliding on the Global Climate Effort

13 December, 2016
Gwynne Taraska, Pete Ogden, Nancy Alexander, and Howard Marano

This article was published by the Center for American Progress.

This column previews a forthcoming report from the Center for American Progress and Heinrich-Böll-Stiftung North America.

 

To date, 17 countries of the G-20—which account for 67 percent of global greenhouse gas pollution—have officially joined the Paris Agreement, bringing it into effect far sooner than anyone expected. If these countries follow through with their commitments to reduce emissions, it will represent unprecedented progress in the global effort to curb climate change.

Unfortunately, U.S. President-elect Donald Trump has proposed a number of policies that would have negative climate implications. In light of this, the G-20 summit in July 2017 provides an important opportunity for other major powers to resist backsliding and even to make some progress in meeting the global climate challenge.

To its credit, the German government, which officially assumed the G-20 presidency this month, is already positioning itself well—and deliberately so—for such an effort. When German Chancellor Angela Merkel announced her three “pillar” objectives for the summit, she explicitly identified climate change as a priority. The pillars include fostering global economic stability; making the global economy viable for the future, including through implementation of the Paris Agreement and the 2030 Agenda for Sustainable Development; and establishing the G-20 as a “community of responsibility,” including by promoting a compact with Africa that would address infrastructure investment, among other topics.

If the G-20 focuses on making infrastructure low carbon and resilient—which would have widespread social benefits—it can make progress across all three pillars. Infrastructure projects that are vulnerable to the physical effects of climate change can cause profound economic damage, while high-carbon projects drive further climate change and economic risk. And given that G-20 countries account for more than 75 percent of greenhouse gas pollution and more than 85 percent of global gross domestic product, they have both the responsibility and the resources to promote low-carbon and climate-resilient infrastructure.

Focusing on climate-compatible infrastructure would be a step forward for the G-20—although one that is rooted in its past and ongoing work. The forum has expanded its infrastructure initiatives in recent years, but the climate and infrastructure workstreams have been largely siloed, despite the fact that the majority of the infrastructure sectors in which the G-20 is promoting investment—energy, transport, and water—are inextricably linked with climate issues. By creating an integrated infrastructure and climate agenda, the G-20 could build on several existing strands of work and fight to preserve global climate progress. Here are five opportunities.

1. Identify and disclose transition risk

As investors, civil society, and governments increasingly turn away from greenhouse gas pollution, the value of assets will shift. High-carbon assets will decline in value or even become stranded: The fossil fuel industry, for example, could lose more than $30 trillion over 25 years. An abrupt reassessment of asset values, however, could have a destabilizing effect on the global economy.

The first step in mitigating this risk—called transition risk—is identifying it. It is in the economic self-interest of companies, investors, and nations to have a clear view of the financial risks and opportunities presented by climate change—particularly in the context of infrastructure projects, which can have decades-long life spans.

Currently, too few companies accurately and thoroughly report their exposure to climate risks. To counter this, the Financial Stability Board—an international body that promotes global financial resilience—created the Task Force on Climate-Related Financial Disclosures, which is currently developing disclosure guidelines that will be finalized in advance of the July 2017 summit.

With the guidelines in hand, the G-20 should turn to the task of promoting implementation. Going forward, G-20 members could adopt a leadership role by considering and publicly disclosing physical and transition risks in major federal projects in order to protect their national economies over the long term. They could also work to institute these practices among the development banks of which they are members.

2. Strengthen fossil fuel subsidy reform

In order to improve investment in climate-compatible infrastructure, countries will need to increase public expenditures and foster the market conditions that attract private finance. Fortunately, the G-20 countries committed in 2009 to eliminate inefficient fossil fuel subsidies—a step that drives progress on both of these fronts. Such subsidies divert public dollars away from infrastructure spending and tilt the investment playing field against renewable energy.

To help build momentum for fossil fuel subsidy reform, the G-20 began a peer review program in which countries can engage in an information-sharing exercise. The first of these peer reviews—completed by the United States and China—was publicly released during the 2016 summit.

Under the German presidency, the G-20 should build on this successful first review by improving and expanding participation in the process. For example, the United States and China could establish a precedent whereby countries that undergo a peer review participate subsequently as advisers. In addition, Germany could establish a channel for stakeholder input in the peer review process.

Importantly, the G-20 should also build on its 2009 commitment and establish the year 2025 as a deadline for phasing out fossil fuel subsidies.

3. Include Paris goals in growth strategies

The growth strategy of each G-20 country—which includes infrastructure plans—has been a crucial contribution to the collective effort to foster economic recovery and prosperity. Countries should include their Paris goals to reduce greenhouse gas pollution and build resilience to the effects of climate change in their growth strategies. This would give their climate commitments credibility and would allow countries to plan, in an integrated way, how to achieve a stable and low-carbon economy.

The Paris Agreement calls on countries not only to submit near-term climate goals but also to formulate national midcentury strategies to decarbonize their economies. Four G-20 countries—Germany, the United States, Canada, and Mexico—have already created their midterm strategies. All G-20 countries should create them by 2020 and include them in their plans for growth.

The G-20 could also implement peer reviews of national progress in adopting renewable energy technologies in the context of their midcentury strategies. This would be in keeping with the forum’s practice of implementing peer reviews when national progress is essential to reaching collective goals.

4. Expand access to climate-risk insurance

The world is already locked into a period of increased climate risk and damage due to the past 150 years of pollution that has accumulated in the atmosphere. This necessitates increased emphasis on enhancing climate resilience.

Recognizing this, the G-20 should promote climate resilience as part of its focus on infrastructure development. In addition, the G-20 should expand access to climate-risk insurance, which can help hedge against potential losses from extreme weather events, providing more security for investments. Climate-risk insurance can also assist with post-disaster recovery and create incentives for adaptation measures.

In 2015, the G-7 set a goal—through an initiative known as InsuResilience—of providing climate-related risk insurance to 400 million additional people in the most-vulnerable developing countries by 2020. Under the German presidency, the G-20 could adopt this same target. It could also address the obstacles to achieving it, such as stakeholders’ lack of familiarity with the innovative policies—for example, parametric risk insurance, regional risk pools, and microinsurance—that present opportunities to expand insurance to new populations.

To this end, the G-20 could support a platform for sharing insurance policy designs and best practices that would be open to all countries, subnational governments, regional organizations, and nongovernmental organizations.

5. Steer investments toward climate-compatible infrastructure

There are a variety of tools that the G-20 could promote in its infrastructure initiatives in order to mitigate transition risk and steer investment toward low-carbon options. For example, G-20 countries should consider the rising cost of carbon pollution in infrastructure investment decisions—a practice known as proxy carbon pricing. This evaluation tool—already well known in the private sector—is inspired by fiscal prudence: Factoring in a proxy price when assessing long-term projects can help countries and businesses determine whether they will remain financially viable in the global shift away from carbon pollution. In the future, G-20 countries and businesses should expand the use of proxy prices that are indexed to the damage to society caused by greenhouse gas emissions.

Conclusion

It is vital to prevent the progress on global climate action from slowing. Fortunately, this year’s G-20 under the German presidency can provide a near-term line of international defense—and it even has the potential to drive progress by integrating its infrastructure and climate agendas. Moreover, doing so would be true to the founding purpose of the G-20, which is to support global economic stability. This cannot be achieved without climate-compatible infrastructure and, more broadly, a swift transition to a low-carbon global economy.

 

Gwynne Taraska is the Associate Director of Energy Policy at the Center for American Progress. Pete Ogden is a Senior Fellow at the Center for American Progress. Nancy Alexander is Director of the Economic Governance Program at Heinrich-Böll-Stiftung North America. Howard Marano is a Research Assistant at the Center for American Progress.

 

ArticleClimate Diplomacy
Source
Topic
Climate Change
Climate Diplomacy

Region
Europe
Global Issues

Topics

Adaptation & Resilience

All countries will need to adapt to some of the environmental, social and economic impacts of climate change that are already unavoidable. Food security, livelihoods, water resource availability and public health are some affected areas. People living in poverty are more vulnerable, having a lower capacity to adapt. Thus, it is essential to promote resilience building. The adaptation and resilience aspects need to be mainstreamed into planning by policy makers and the private sector as well as integrated into development strategies.

Biodiversity & Livelihoods

Nature protection is most sustainable if it essentially contributes to the long-term stability of human needs. Today many regions around the world are confronted with increasing destruction of the natural foundations of life. The consequences of wide-ranging resource destruction are no longer regionally limited, but rather represent a global threat. Those affected are mainly rural populations, who find the sources of their income and the foundations of their way of life swept away. The depletion and destruction of natural resources goes hand in hand with decreasing agricultural yields and increasing poverty, which in turn forces the affected populations to deplete the remaining resources.

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Capacity Building

On the one hand, conflicts are caused by structural factors, such as economic and social inequality or environmental destruction. On the other hand, conflicts are fuelled by a lack of democratic structures, deficient mechanisms of non-violent conflict settlement, inadequate rule of law, the destruction of social and cultural identity and the disregard of human rights. Against this backdrop, development policies have been dedicated to a broad concept of security, which comprises political, economic, ecological and social stability. As a consequence, development cooperation agencies and actors have developed a broad spectrum of approaches for conflict prevention and transformation as well as for sustainable use of natural resources.

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Cities

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Civil Society

Civil society is the first victim of environmental pollution, under-development and conflicts. Economically disadvantaged and politically marginalized population groups are particularly affected by violent conflicts as well as increasing resource degradation. Simultaneously, civil society is a fundamental pillar for implementing sustainable development. It contributes in many ways to strengthening conflict prevention and plays a significant role in the peaceful and democratic development of states. It must be supported to strengthen civil rights, adherence to human rights in general and democratic participation.

Climate Change

Climate change resulting from the emission of greenhouse gases represents one of the vital challenges for international environmental policy. Flooding, droughts, shifting of climate zones and increasingly frequent and intense extreme weather events will have serious economic and social consequences for entire regions. The climate problem is also directly linked to the question of future energy generation.

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Climate Diplomacy

To address the challenges posed by climate change, a new profile of climate diplomacy is evolving. This utilises a full range of policies, including development cooperation, conflict prevention efforts, and humanitarian assistance, in addition to more traditional measures of climate change adaptation and mitigation. Moving from a risk analysis of climate-related threats to well-timed preventive action requires a greater commitment to integrating climate change concerns into development, foreign, and security policies. Examples include strengthening diplomatic networks, building new alliances with partners, and raising awareness – not only of potentially negative climate change impacts, but also of opportunities to embark on a sustainable transformation of our societies.

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Co-Benefits

Climate action entails an array of economic, social, political and environmental co-benefits. It provides an opportunity for economic growth and new jobs. Many investments can take into account climate considerations without becoming more costly. Further important co-benefits include: improved energy security, less local air and water pollution, health benefits as well as ecosystem and biodiversity protection.

Conflict Transformation

In order to overcome the structural causes of violent conflicts and thus bring about an improvement in the framework conditions for peaceful and fair development, it is essential to have long term and broadly planned peace development and peace advancement. Various governmental and non-governmental, national and international actors and groups are involved in these processes.

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Development

Climate change and development are inextricably linked. Climate change endangers the development agenda and has the potential to reverse development goals. Furthermore, successful mitigation of climate change heavily depends on development choices around the world. Therefore, development strategies need to be climate-compatible to provide long-term success, and there are viable policy options that support this compatibility. Many mitigation and adaptation activities can present development opportunities to developing countries and avoid the lock-in to environmentally damaging technologies.

Early Warning & Risk Analysis

The reasons for the development and escalation of conflicts and the incidence of risks are multifaceted and complex. Simultaneously, the assessment of the specific causes in the form of risk and conflict analyses can contribute to a better understanding of these processes and make it possible to provide warning of negative developments, or ideally help prevent them. In the context of natural resource use, risks and conflicts have gained increasing attention in the past years. The debate on possible future water wars is merely one example.

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Energy

The well-being of individuals, communities and nations depends on the availability of energy resources. The gap between energy supply and demand appears to be growing, making the world vulnerable to serious economic shocks. At the same time, the burning of fossil fuels causing climate change is one of the vital challenges of international environmental policy. So far, only rudimentary approaches exist for shaping climate and energy security in a sustainable way. The components of a strategy that can contribute to reducing vulnerabilities related to climate change and energy policy include a greater role for renewable energies, the improvement of energy efficiency and a stronger decentralisation of energy supply.

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Environment & Migration

The economic, social and environmental consequences of climate change aggravate the breakdown of eco-system-dependent livelihoods and are likely to become dominant drivers of long-term migration. Natural disasters already cause massive shorter-term displacement and the number of temporarily displaced people is likely to further increase with climate change. For vulnerable populations in vulnerable regions, such as the Sahel zone or the Ganges delta, migration often becomes the sole survival strategy. In order to address climate-related displacement and migration successfully, knowledge of effective adaptation and an improved understanding of how environmental change affects human mobility is essential. 

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Finance

Climate finance, from all sources, plays a key role in supporting and enabling adaptation and mitigation action as well as climate and energy innovation. The Paris Agreement ensured that the Green Climate Fund and the Global Environment Facility are at the core of climate finance architecture as entities entrusted with the operation of the Financial Mechanism of the UNFCCC. Increasing climate finance from all relevant public and private sources is crucial. Furthermore, much needs to be done to redirect finance flows to sustainable paths, e.g. reducing fossil fuel subsidies, introducing maritime and air transportation taxes. The conditions for green investment in developing countries should also be improved.

Forests

Forests are disappearing at an alarming rate. Competition for forest resources triggers, exacerbates, or finances numerous crises and conflicts in tropical developing countries. Illegal logging and timber trade foster instability and sometimes violent conflict by strengthening illegal and armed groups, increasing corruption and exacerbating use and claim conflicts among local communities, the state and the business sector. Forests are a vital resource to poor people but they can also become areas of conflict. Sustainable management of forest resources is therefore key to preventing violent conflict over and within forests.

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Gender

Gender plays an important role as a category of conflict for many reasons. The interlinkages between gender, environment and conflicts are complex and much research is still needed. Existing insights suggest that conflicts may worsen gender inequalities that existed before the outbreak of violence. The unequal distribution of land property rights in many parts of the world serves as an example. Moreover, women (and children) are among those most affected by both violent conflict and natural disasters. At the same time, women carry much of the burden of trying to implement rehabilitation measures after crisis events.

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Land & Food

Increasing water scarcity, desertification and crop failures due to extreme weather events are becoming more and more of a threat to global food production. While the world’s population continues to grow rapidly, food production is unable to keep pace. Due to the global food crisis in 2008, the number of hungry people reached the symbolic one billion threshold for the first time – corresponding to about 16 percent of world population. Food insecurity may be a consequence or cause of conflicts. Violent conflicts often lead to the destruction of agricultural infrastructure and means of production, as well as to the displacement of local communities.

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Minerals & Mining

In the past, the discovery and tapping of valuable or strategic resources like valuable minerals, oil and natural gas, particularly in developing and emerging countries, has often led to large scale environmental contamination and negative development. The "resource curse" of some countries shows that the wealth from resource yields is frequently unfairly distributed; instead of serving development it advanced the formation of corrupt elites and in some cases even led to conflicts and civil wars. Measures in various sectors and at all levels are important in order to use the potential of these natural resources in a manner that is sustainable and prevents conflicts.

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Private Sector

The spread of violent conflict not only affects people but also companies located in such regions. Destruction of investments and infrastructure, collapse of markets and trade partnerships, flight and expulsion of employees are phenomena of conflicts and environment-induced crises that directly affect companies in unstable regions. Almost all branches of the economy thus have a clear interest in a stable and peaceful environment for their activities. Conversely, the business sector plays an important role in the interaction of economic growth, social development and a healthy environment, all of which can advance peace and sustainable development. 

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Security

Environmental issues have a significant security dimension. Access to, and overuse of, natural resources often play a key role in civil wars or other forms of internal domestic conflict. This is compounded by climate change and environmental degradation. Climate change is now widely recognised as a non-traditional, risk-multiplying threat that will have increasing security impacts. Key risks with possible implications for human and national security include water scarcity, food crises, natural disasters, and displacement. More preventive diplomacy and advocacy is needed to address the strategic implications of climate and environmental change.

Sustainable Transformation

Sustainable Transformation allows societies to profit from a growing, environmentally sustainable and socially inclusive economy – especially in emerging and developing countries. This requires a higher up-front investment, but the benefits of a sustainable transformation in the medium and long term are significant. For instance, energy cost savings and reducing the impact of price volatility offer major incentives for deploying renewable energies and promoting energy efficiency. Such benefits exist in all key sectors of the economy.

Technology & Innovation

Innovations and technologies are already readily available and affordable but their global diffusion and uptake remains a challenge. Innovation and technology are crucial to achieving ambitious climate change mitigation and adaptation targets. However, research and development often do not receive appropriate public support. Developing countries can leapfrog high-carbon industrialisation phases by adopting, deploying and improving existing innovations and technologies. For this, it is essential to minimise financial, administrative and political barriers.

Water

The availability of freshwater resources in sufficient quantity and quality is essential for the preservation of human health and sound ecosystems. The use of water resources is also vital, however, for economic development: whether for agriculture, industrial production or for electricity generation. The world's freshwater resources are distributed very unevenly in terms of geography and seasons. In addition, water shortage is becoming more prevalent in several regions due to population growth, economic development, urbanisation and increasing environmental pollution. Thus, water resources can hold potential for conflicts between parties who have different interests and needs.

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Regions

Asia

The environment in Asia is already under tremendous pressure as a result of the unsustainable use of land, forests, water and even air in many regions. Climate change will only exacerbate these challenges. Rising sea levels will likely endanger densely populated areas, changes in the monsoon patterns can strongly impact agriculture, melting glaciers will increase long-term water scarcity, and extreme weather events such as heavy rainfall and cyclones can pose further hazards.

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Central America & Caribbean

Natural disasters and water scarcity are key challenges for most of Central America and the Caribbean. These challenges will become even more pronounced as the climate changes. Weak resource and disaster risk management and land disputes pose additional security challenges for large parts of the region. Several countries of Central America and the Caribbean have limited adaptive capacities as they face political instability caused by high social inequality, crime, corruption, and intra-state conflicts.

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Europe

As one of the most developed and most densely populated regions in the world, Europe makes heavy use of its resources, resulting in difficult trade-offs and negative consequences for the environment and ecosystems. Land is used for settlements, agriculture and dense infrastructure, creating problems of soil degradation. Water resources are stressed due to unsustainable agricultural practices. Despite nature protection policies, Europe continues to lose biodiversity at an alarming pace. Some of these trends are exacerbated by climate change, which is expected, for instance, to lead to shifts in water availability.

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Global Issues

Resource scarcities, environmental pollution and climate change are not limited by national borders, but often have a transboundary or even global impact. These issues interact with political stability, governance structures and economic performance, and can trigger or worsen disputes and violent conflicts. Exacerbating some of these trends, climate change is likely to lead to the degradation of freshwater resources, declines in food production, increases in storm and flood disasters and environmentally induced migration. All these developments pose potential for conflict.

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Middle East & North Africa

The geopolitical position of the Middle East and North Africa (MENA), its fossil fuel resources, high population growth and the political changes spurred by the Arab Spring all make the region one of the most dynamic in the world. Nevertheless, it is also one of the most arid and environmentally stressed. Dwindling water resources, limited arable and grazing land, high pollution from household and industrial waste, remnants of conflicts and increasing desertification are key environmental challenges.

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North America

Climate change has various impacts on the three North American countries of Canada, Mexico and the US. Canada and the US have well-developed adaptive capacities and foster the strengthening of capacities in other regions as well. With high per capita emissions, these two countries also bear a greater responsibility for a changing climate. Mexico has a sound national strategy for climate change adaptation, yet fewer capacities than Canada and the US. The poorer and rural populations of Mexico are especially vulnerable to climate change, due to an increased sensitivity and a lower adaptive capacity.

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Oceania & Pacific

In Oceania, population growth and economic development trends put a strain on oceanic and island ecosystems. Freshwater scarcity, overexploitation of fisheries, loss of land biodiversity, forests and trees, invasive species, soil degradation, increasing levels of settlement, poor management of solid and hazardous waste and disproportionate use of coastal areas are some of the problems. Climate change exacerbates most of these trends, while also raising questions about the future sovereignty of some island states.

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South America

South America has diverse and unique ecosystems and is very rich in biodiversity. Weak natural resource management, land disputes and extreme weather events bring about significant challenges for the region. While South America accounts for relatively few CO2 emissions, the changing climate will alter its ecosystems and greater climate variability will lead to more hurricanes, landslides, and droughts.

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Sub-Saharan Africa

In many African states, environmental security issues rank high on the political agenda. Throughout the continent, countries suffer from water scarcity, food insecurity and energy poverty. These chronic and worsening resource scarcities have severe livelihood implications and are exacerbated by political conflicts over access to and control over these resources. Climate change may seriously threaten political and economic stability in Africa. It may also put a severe strain on the capacities of states and societies to co-ordinate activities, to communicate and to organize.

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