As the Group of Seven (G7) convened for its first summit since the pandemic began last year, there were a series of interlinked crises that required resolving, from insufficient climate action and a fitful global economic recovery, to grappling with an ever-changing landscape of power, including the rising influence of China.
Building on the Climate Leaders’ Summit, hosted by US President Joe Biden in April, during which many countries, including countries from the G7, pledged more ambitious carbon reduction plans, the G7 released a joint communiqué determined to put ‘climate, biodiversity and the environment at the heart of COVID-19 recovery strategies.’
Furthermore, with the stated goal of making 2021 a ‘turning point for multilateralism’, the UK government, host of this year’s summit, set a high bar while the return of the US in international policy agenda-setting ushered in new energy and commitments.
However, the commitments to date are considered insufficient to reducing predicted global temperature rises in line with the Paris Agreement with carbon emissions projected to soar by a near record amount this year alone. The future of global climate action, therefore, continues to hang in a precipitous balance.
Aligning climate goals with implementation
With the UK serving as president of both the G7 and COP26 this year, and the Italian government serving as president of the G20 and co-president of COP26 too, Prime Ministers Boris Johnson and Mario Draghi have a rare opportunity to seek alignment at this critical juncture. But, though G7 countries have become increasingly united in their climate goals, much work remains to produce a convincing implementation plan.
While the White House has noted that ‘for the first time in history’ all G7 leaders will align their short and long term climate goals consistent with keeping the 1.5°C threshold, a recent report from the Science Based Targets Initiative (SBTi) has found that no major G7 stock indexes are on a 2°C pathway, let alone close to 1.5°C, with four of seven countries on pathways of 3°C or above.
Therefore, maintaining the momentum for the rest of 2021, as well as intensifying timelines for national implementation plans that include the private sector transition, is going to be crucial in the months ahead.
Just transition
The concept of a just transition is integrated into a number of global commitments including the Paris Agreement which acknowledges ‘the imperatives of a just transition of the workforce and the creation of decent work in accordance with nationally-defined development priorities.’
Building from this commitment, the UK – backed by the EU – has pushed for a promise from G7 countries to phase out coal in the 2030s in a move to align major democracies against coal in order to send a clear message to China which is responsible for more than half of annual global coal burning.
But leaders have failed to agree on a timeline to end domestic coal use resulting in only a call to ‘accelerate’ the decline of coal and leaving the summit without a decisive outcome on a key climate issue.
However, the White House has separately announced the end of G7 funding of new coal generation in developing countries and has offered up to £2 billion for poorer nations to stop using coal. Importantly, the ‘G7 Industrial Decarbonization Agenda,’ billed as a ‘first of its kind’ platform, aims to accelerate innovation, deploy decarbonization technology and align standards.
However, joint efforts to achieve rapid – and fair – decarbonization pathways must continue to seek increasing ambition to maintain trust in the landmark Paris Agreement and build toward consensus on important issues leading up to COP26.
Mobilizing billions
The G7 summit also reaffirmed the outcome of the pre-summit communiqué from finance ministers which committed ‘to increase and improve our climate finance contributions through to 2025’ to help reach the annual $100 billion pledged to support climate action in developing countries. Delivering on this pledge is a key test for the G7 and a failure to achieve this would harm the chances of a positive outcome in Glasgow.
The communiqué also stressed support for ‘moving towards mandatory climate-related financial disclosures’ and to green the global financial system so that economic decisions take climate considerations into account. Ensuring multilateral development banks (MDBs) and private sector finance are in alignment with Paris Agreement goals will be crucial and must be addressed before COP26.
In addition, the announcement of the Build Back Better World (B3W) Partnership for clean and green growth could be an important initiative if it can deliver a step change in the approach to investment for infrastructure. The partnership will require wider financial support, such as from the G20, if it is to really add value but this may be politically difficult if it is set up as a response to China’s Belt and Road Initiative.
Achieving sustainable trade
International trade policy that integrates clear principles for environmental sustainability and social equity can help deliver the speed and scale of necessary climate commitments and the summit points to some advancement on G7 leadership of policies that would encourage investment and innovation in low-carbon development.
However, while the trade ministers’ communiqué reaffirmed the ‘vital role’ of trade in the build back better agenda, it lacked substantive policy commitments. Expanding sustainability targets beyond deal-by-deal trade agreements by formally integrating core elements across trade policy could be crucial to spurring cooperation to incentivize change.
Moreover, modernizing the World Trade Organization (WTO), for which the G7 trade ministers offered ‘strong support’ in their communiqué is a widely acknowledged precondition for formalizing sustainable trade and the WTO’s next ministerial conference following COP26 provides an opportunity to further advance this agenda at the international level.
Looking ahead
As the G7 becomes more ambitious and less powerful, the success of its initiatives will come to depend on the agreement of the larger, and less democratic, G20 members. The UK and Italian governments, as co-hosts of COP26, must now seek to build further momentum from the tentative G7 progress to achieve an ambitious outcome.
