Can the G20 Summit Give New Impetus to a Global Energy Transition?

By Dr Sybille Röhrkasten

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On 4 and 5 September the next G20 Summit will take place in Hangzhou, China. While the G20 was initially created as a forum for discussion and collaboration to prevent financial crises, in the last several years the promotion of a sustainable energy supply has been added to the agenda. Some important first steps have already been made, but they are far from sufficient to bring about a global energy transition. The German G20 presidency 2017 provides an opportunity to pursue a more ambitious agenda.  

The G20 brings together countries that are of central importance for a global energy transition. Together, the G20 members are responsible for more than three-quarters of the world’s energy consumption and greenhouse gas emissions. At the same time, member countries Germany, Japan, France, and the United Sates are by far the largest bilateral donors of official development aid in the energy sector. And the G20 states also have a significant influence on international organizations such as the World Bank and the International Energy Agency. If the G20 agree upon  shared goals and action, these could be decisive for accomplishing a global energy transition.

The G20 Energy Agenda

Energy-related issues have been part of G20 meetings since 2009, when the member countries declared their intent to phase out harmful and inefficient subsidies for fossil fuels. This formulation allows for some loopholes, for example, in the case of supposedly efficient subsidies (on this see a detailed analysis by my colleague Andreas Kraemer). Nevertheless, it sent an important signal to the international community. Initially international organizations were commissioned to produce analyses of the scope of existing subsidies. Then the G20 developed guidelines for a voluntary peer review. China and the USA will be the first governments to publish the results of these peer reviews; Germany, Mexico, and Indonesia will follow.

The scope of the G20’s work on energy issues has substantially expanded since it created an energy working group in 2012. In addition to the phasing out of fossil fuels subsidies, the Energy Sustainability Working Group is dedicated to three main topics: the expansion of renewable energy, the promotion of energy efficiency, and access to energy. The working group’s focus reflects the triad of objectives outlined by the UN initiative Sustainable Energy for All (SE4All) and the UN Sustainable Development Goal on energy adopted in September last year. In order to promote the worldwide expansion of renewables, the G20 works closely with the International Renewable Energy Agency (IRENA). The work programme adopted last year focuses on the analysis of technology costs and the integration of variable renewable energy sources like wind and solar power. On the matter of energy efficiency, the G20 is cooperating with the International Partnership for Energy Efficiency Cooperation (IPEEC). A first plan of action, adopted in 2014, is dedicated to the areas of transportation, buildings, and industry, among others. The collaboration was then expanded to additional areas under the Chinese G20 presidency. The G20 efforts to improve worldwide access to energy are coordinated by SE4All. Although this was initially focused on the region of sub-Saharan Africa (on this see also the IASS’s study “The Future of Africa’s Energy Supply”), it has now been expanded to include the Asia-Pacific region.

Global Energy Transition: An Ambitious Endeavour for the German G20 Presidency in 2017

During Germany’s G20 presidency in 2017, Germany will have the opportunity to significantly influence the G20 energy agenda. In particular, it will urge for implementation of the Paris Climate Agreement and advocate for more use of renewables and increasing energy efficiency. As Rainer Baake, State Secretary of the German Federal Ministry for Economic Affairs and Energy, emphasized in a guest commentary for the German weekly newspaper DIE ZEIT, the government is dedicated to pursuing a global energy transition. He makes it clear that, while renewables and energy efficiency are central pillars of a global energy transition, on their own they are not sufficient. In order to achieve the goal of the Paris Agreement—limiting global warming to under 2° C—Baake argued that a worldwide strategy for phasing out the carbon intensive energy sources coal, oil, and gas is essential. And we are still a long way from accomplishing this.

Renewable energies have experienced a remarkable expansion in the last several years, as the report Global Trends in Renewable Energy Investments 2016 clearly shows. Worldwide investments in renewable energy—this study does not include the controversial large hydropower dams—increased more than six-fold between 2004 and 2015. Reaching a total of 286 billion US dollars in 2015, this is more than twice the amount invested in coal and gas during the same period. And the report REThinking Energy 2014 highlights the fact that 2013 saw a reversal in worldwide energy trends: for the first time renewables constituted the majority—58%—of new power generation capacity.

However, by focusing on the expansion of renewables only, it is easy to lose sight that the world’s energy supply is still dominated by conventional sources. According to the Renewables Global Status Report 2016, modern renewable energy sources made up only slightly more than 10 percent of the global energy supply in 2014. Fossil and nuclear energy, by contrast, totalled more than 80 percent. And traditional biomass, such as firewood, had a 9 percent share—nearly the same amount as modern renewables. Even in the case of electricity, an area in which the use of renewables is most advanced, more than three-quarters of worldwide supply was accounted for by non-renewable sources. Renewable electricity mostly relied on hydroelectric power; other renewables combined made up only 7.1 percent.

For the goals of the Paris Climate Agreement it is essential for the worldwide energy supply to undergo a complete restructuring, especially in light of the fact that the energy sector is responsible for two-thirds of global greenhouse gas emissions. In order to limit global warming to significantly under 2 degrees, a large share of the world’s reserves of coal, petroleum, and natural gas must be left in the ground. Arriving at an international consensus on this matter is of course extremely difficult, for it is not in the economic interests of the fossil-fuel producing states to abstain from exploiting their resources.

With Germany’s presidency, the guidance of the G20 is in the hands of a country that has a strong track record of pursuing a highly progressive energy transition policies, both domestically and internationally (on this see also our  study on the German energy transition in international perspective). Germany should therefore use the G20 presidency in 2017 for promoting an ambitious energy agenda. In addition to urging for a climate-friendly global energy supply, it should advocate for a rapid and comprehensive restructuring of the global energy supply in G20’s core track dealing with economic and financial issues. For investments in fossil energy are not just harmful to the environment, they are also in danger of becoming stranded assets and thus represent an increasing risk to financial stability.

As part of our research programme on a global energy transition, we will be looking extensively at G20 energy topics in the coming months. Among other activities, we will publish a study at the end of this year that sheds light on major energy trends and policy priorities of key G20 states. Our aim is, on the one hand, to show the great variety of developments within the G20 countries. On the other hand, we also aim to show that these very different countries can serve as important sources of inspiration for how to create a sustainable energy supply—even in places where one might least expect it.

Header image: istock/idealistock

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