The Indonesian G20 presidency ended with the Leaders’ Summit and the release of the Bali Leaders’ Declaration. This joint statement from the grouping marks a commendable success for Indonesia, given the multiple geo-political crises that have divided many of the G20 countries in 2022. The war in Ukraine, the global energy and food crises, fears of a global recession, an unequal recovery from the pandemic, and the lack of trust between the Global North and the South on climate action were just some of the challenges the Indonesian presidency had to contend with.
Encouragingly, the Declaration has a clear focus on several issues related to climate action. The G20 countries account for 81 percent of energy-related CO2 emissions and 77 percent of global energy consumption. The grouping is increasingly expected to show leadership in the climate discourse and the signals from this declaration will have a strong impact on climate action across the world.
This year’s Leaders’ Summit also coincides with the COP27 negotiations, with the outcomes from the COP negotiations set to be communicated within two days of the G20 communique. Thus, the declaration will also set the stage for some of the key outcomes from the COP negotiations this year and going forward. It is, therefore, worthwhile to take a closer look and read between the lines of some of the key statements from the G20 Leaders’ Declaration.
Energy access and energy security are highlighted as two key goals that must be managed along with the energy transition. The text reaffirms the G20’s commitment to SDG 7 aimed at ensuring “access to affordable, reliable, sustainable and modern energy for all.” In particular, the focus is on ensuring affordable energy supplies for all countries.
This assumes great relevance given the current energy crises brought upon by the Ukraine War and the efforts by the G7 to implement price caps on Russian oil, which could lead to a substantial rise in energy costs for developing economies. Questions related to energy equity are likely to be a key part of G20 agenda going forward since the next three presidencies will be taken up by developing economies—India, Brazil, and then South Africa. The G20 declaration will provide a boost for developing economies in their efforts to secure access to a greater share of the existing global carbon budget to synergise climate action with other development goals.
Another major takeaway is the renewed resolve from the G20 to pursue efforts to limit temperature rise to the ambitious 1.5-degree Paris target and not just the 2-degree target. This statement is substantial since there was a fear that the present energy crisis might force some G20 countries to backslide on previous commitments.
This year’s statement can serve as a good starting point for much stronger actions from all G20 countries. As per the IPCC’s latest report, achieving the 1.5 target will require achieving net zero emissions globally by 2050, compared to a 63 percent emission reduction needed for the 2-degree target. The report also states that emissions from existing and planned fossil fuel infrastructure are already 63 percent higher than the carbon budget available for the 1.5-degree target.
Essentially, translating the G20’s commitment into real action will require an immediate cessation of all forms of fossil fuel investments and a much faster transition towards greener fuels. However, the communique stops short of outlining a specific pathway for countries to achieve the 1.5-degree target, an issue that the upcoming Indian presidency must look to address more clearly.
This also has implications for one of the key issues in the ongoing COP negotiations. At COP27, India put forward a proposal for a global deal to phase out all fossil fuels, including oil and natural gas. This is essentially a step forward from COP26 where developed countries tried to force through a deal aimed at ‘phasing out’ coal alone. This is a sticky issue, since many of the developed western countries are much more reliant on oil and natural gas compared to developing economies.
The latest declaration from the G20 should provide a fillip for achieving such a global deal, a necessity for achieving the 1.5-degree target. If the COP negotiations this year fail to agree on such a deal it will also call into question the actual commitment from the developed nations in the G20 to achieving what is stated in the G20 communique.
The declaration also addresses some of the burning issues for developing economies associated with increased finance and technology transfer. It urges developed economies to deliver on the US $100 billion goal and scale it up going forward. While this is encouraging, it also serves as a self-indictment for the developed economies within the G20 that are the ones largely responsible for not adhering to the goal.
The text also refers to an increased need to focus on adaptation finance and even mentions loss and damage. These are also key issues at the COP27 negotiations and the reaffirmation by the G20 shows solidarity with this evolving agenda, although there is a long way to go to achieve any tangible results. The role of Multilateral Development Banks (MDBs) in catalysing finance for developing economies is also mentioned but only in the context of SDG financing and not specifically for climate finance. There is an increasing consensus that MDBs have a key role to play in catalysing greater flows of private climate finance.
However, the present structure of MDBs will require substantial reforms to be able to deal with the unique challenges of climate investments. There seems to be a fear among the developing economies within the G20 that an increased focus on climate investments might lead to lower flows from MDBs toward overall SDG financing. This is an issue that the Indian G20 presidency will have to address. There is a need for a clearer definition of climate and SDG financing and a clear identification of the role of MDBs in maximising the synergies between both these goals.
The need for just and inclusive energy transitions is another key theme throughout the Declaration and the Bali Energy Transition Roadmap. Essentially, the focus is on eliminating energy poverty, creating green jobs, transitioning fossil fuel workers, and ensuring gender equality in the new green energy systems. These principles will also form a key part of India’s G20 agenda in 2023.
Indonesia also utilised the Leaders’ Summit to announce a Just Energy Transition Partnership (JET-P) along with a group of developed economies. The partnership intends to mobilise US $20 billion in public and private finance to help Indonesia achieve net zero by 2050 while also ensuring a smooth transition for fossil fuel workers.
The G7 countries have been encouraging many developing nations to engage in such partnerships, but India has been reluctant so far. However, such a deal can have a catalytic effect if designed properly and it will be interesting to see how India’s presidency addresses this issue. Even if India does not engage in a JET-P itself, it must still create the space for such conversations for other developing nations as part of its G20 agenda.
Overall, at a time of global geopolitical tumult, the ambitious tone set out by the Bali Declaration bodes well for global climate action. In particular, it manages to address many issues from the perspective of the developing world and serves as a good starting point for a coherent Global South perspective on climate action from the G20.
(This article first appeared in the ORF.)
Promit Mookherjee is Research Associate in the Transport & Urban Governance Division of The Energy and Resources Institute. Views are personal and do not represent the stand of this publication.
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