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Five things the G20 must do to tackle climate change

When the Italian government selected Venice as the setting for this weekend’s meeting of G20 finance ministers, it hoped this would remind the wider world of its merits as a beautiful travel destination.

Now, however, the stage has a grim symbolism. Next week a plenary meeting of the United Nations Educational, Scientific and Cultural Organization’s World Heritage Committee is likely to declare that the city is an “endangered” monument.

Global warming is causing a sharp rise in sea-levels. Thus Venice is likely to sink under the waves in coming decades — unless world leaders take action to stop climate change.

Can they? Based on the state of debate leading up to this gathering, it is hard to feel optimistic. And if you want to understand why, one good place to look is at what oil and gas companies are saying themselves.

Consider, by way of example, the latest annual statistical review that emerged on Thursday from the energy group BP, an entity that is one of the first to promise to cut its dependency on fossil fuels. (I moderated a discussion with BP on Thursday as well as an event in Venice).

The review starts by outlining some welcome news (for climate change warriors, if not energy investors): carbon emissions fell more than 5 per cent in 2020, primarily due to collapsing oil consumption.

That is startling. But what is more stunning is that Spencer Dale, BP’s chief economist, reckons that “the rate of decline in carbon emissions observed last year is similar to what the world needs to average each and every year for the next 30 years” in order to hit the Paris climate goals of keeping global warming between 1.5C and 2C. This is crucial if we are to prevent irreversible damage to Venice and everywhere else.

Such a demand would require massive behavioural change, particularly given that last year’s decline only happened because of an enforced pandemic-related lockdown and economic slump. Indeed Dale reckons that the scale of drop was comparable to what would have happened if the world had a “scarily high” carbon price (ie tax) equivalent to $1,400 a tonne ($1,543 a tonne) — as opposed to the $2 a tonne price the IMF estimates was the world average before the pandemic.

It will be extremely hard to replicate this. Thus Dale warns that “there is a significant risk that last year’s fall in carbon emissions will be reversed” — it may have occurred already. While renewable energy use soared in 2020, it still “hasn’t made even the smallest dent in total coal generation” — the key source of global warming.

So what should the G20 do? Ideally, at least five things. First, the finance ministers must collectively embrace a steadily rising carbon price and tax. The EU is doing this. But Joe Biden’s administration is dragging its feet in a shameful way, seemingly because of domestic political concerns. The rest of the G20 should demand that America change its position. 

Second, the G20 must also demand China backs away from coal, which provides the majority of its power (the country accounts for more than half of global consumption). The Beijing government has vaguely pledged to do this, and has expanded renewable energy use in an admirable manner. But it must be persuaded to cancel current plans to build yet more domestic coal plants — and stop financing those in its Belt and Road Initiative.

Third, rich western countries must get serious about helping poorer nations make the transition to green energy. The International Energy Agency calculates that $5tn of investment will be needed each year between now and 2030, partly in the developing world.

In theory, global capital markets could easily fund this. But in practice this will not happen in the emerging markets without concessionary financing from multilateral groups, rich nations and/or blended finance programmes. Sadly, these are missing in action.

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Fourth, the G20 must take a blindingly obvious step: foster collaborative research into technologies such as carbon capture, hydrogen-based fuels and battery storage. Nuclear must be on the menu too. In an ideal world, such collaboration could result in more co-ordination between America and China; in the real world, it would be cheering to see even transatlantic co-operation. 

Fifth, consumers need to be mobilised in the climate change fight. Many are not, either because the issue is so lamentably politicised — or because they are “turned off” by the fact the issue is presented as “a lot of bad news and [I feel] its all my fault”, as the actor Robert Downey Jr recently said to US climate envoy John Kerry.

However, it is crucial that voters have a sense of personal agency and urgency. If that emerged, alongside a carbon price, business and government would be forced to change. Without it, it seems hard to believe we will ever hit the Paris goals on time.

What is really needed, then, is the same sense of shock about climate risks among G20 governments and citizens that we have just seen with the pandemic. If the threat to Venice — or the heatwaves in North America — create this, so much the better. But the frightening risk now is that action will be delayed. If so, we will all sink — in a literal and a metaphorical sense.

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