Significance of IGES:G20 Summit for Climate change, Green Finance and SDGs

1? Climate change and Energy issues

1.1? agreement reached at the G20 summit

The declaration of ratification of the Paris Agreement by China and the United States is very important, which provides a great impetus to the ratification process of the Paris Agreement and brings hope for the early entry into force of the Paris Agreement.

The communiqu é of the G20 Hangzhou Summit (hereinafter referred to as the communiqu é) failed to meet high expectations. First, in a narrow sense, although G20 leaders promised to ratify the Paris Agreement and support its early entry into force, they did not adopt a specific timetable. Second, apart from reiterating the provision of climate finance through the Green Climate Fund and other channels, as well as expectations for greenhouse gas reduction through other multilateral agreements, the communiqu é did not include other specific actions. Third, the communiqu é failed to address the decarbonization transformation envisaged in the Paris Agreement. This transformation inevitably requires immediate action by the energy sector as well as the entire economic system and the financial sector. The communiqu é discussed energy and financing issues in the context of traditional economic growth without taking into account the context related to climate change or sustainable development.

1.2? Development Direction and Challenge of fossil fuel subsidy

G20 leaders have pledged to phase out fossil fuels in the medium term. Countries such as Germany, Peru and New Zealand have completed or are conducting peer reviews of fossil fuel subsidies, which will increase transparency and mutual understanding. Other G20 countries and the Asia-Pacific Economic Co-operation (APEC) countries should follow suit.

Identifying fossil fuel subsidies and introducing reform proposals is a big step forward, but the real problem is domestic political support and the implementation of practical phase-out steps. The G20 should comprehensively review and extensively exchange experiences and lessons learned from fossil fuel subsidy initiatives.

2? Green finance

2.1? The challenges and political signals needed to expand green finance

Although some progress has been made in global green finance, only a small portion of bank loans are classified as green finance, less than 1 per cent of global bonds are marked green, and less than 1 per cent of global institutional investors hold green infrastructure assets.

The communique mentions major challenges unique to green finance, including difficulties for enterprises to take the initiative to assume environmental externalities, asymmetry of environmental information between investors and recipients, lack of analytical capacity, and lack of clarity in the definition of green finance. The communique also proposed seven voluntary options to overcome these challenges.

The internalization of external environmental factors is one of the serious challenges in promoting green finance, so it is important to send a clear signal to private financiers and investors by strengthening policy measures to phase out fossil fuels and carbon pricing. In fact, the institutions that control 13 trillion dollars of investment funds have called for the G20 to adopt a strong carbon pricing mechanism and specific plans to phase out fossil fuels and ratify the Paris Agreement within 2016.

2.2? China strategically uses the opportunity of the G20 summit

China strategically uses the opportunity of its rotating G20 presidency to promote green finance. Just a week before the G20 summit, China's State Council approved the guidance on Building a Green Financial system, which includes a series of policy incentives to support green investment, such as green guarantee mechanisms, interest subsidies, etc., and launched the National Green Development Fund. The day before the G20 summit, China mentioned its commitment to start a national cap-and-trade program in 2017. However, it is not clear how the G20 will implement the recommendations of the communique.

3? Sustainable development goal

The 2030 agenda for Sustainable Development and SDGs were discussed and emphasized many times in the G20 Hangzhou Summit and communiqu é. However, the actual text of the communiqu é places more emphasis on traditional development priority areas. Overall, although the G20 communiqu é has made some achievements, there have also been some setbacks.

3.1? A place to move forward

The G20 Hangzhou Summit provides an opportunity for China to showcase its development priorities on the global stage. SDGs goes hand in hand with efforts to control domestic pollution in China, one of the topics of the 13th five-year Plan. Therefore, the leadership can use SDGs to make the outside world pay more attention to pollution control. China has made remarkable achievements in achieving the Millennium Development goals (MDGs) and wants to reach the same level in terms of SDGs.

The United Nations also used the meeting to draw attention to the new development agenda. Un Secretary-General Ban Ki-moon praised China's efforts to ensure that SDGs was included in the discussions at the G20 summit in Hangzhou. He also praised other G20 countries, including France, Germany, Japan, Mexico and South Korea, for establishing an "inter-ministerial coordination mechanism" (inter-ministerial coordination mechanisms) to help coordinate and mobilize national efforts to support the implementation of SDGs.

3.2? A place to fall back.

Although there are signs that G20 countries are willing to actively promote SDGs, the G20 Hangzhou Summit does not pay enough attention to environmental issues, which is reflected in the uneven coverage of environmental issues in the outcome document of this meeting. The G-20 Action Plan for the implementation of the 2030 agenda for Sustainable Development includes 17 subsections, including infrastructure, of which only climate, energy and agriculture are strongly linked to the environment.

In the ranking of priorities in the G20 communiqu é, most documents focus on traditional development issues. After briefly mentioning SDGs at the beginning and paying more attention to traditional economic issues, the communique discussed SDGs near the end. It was not mentioned until paragraph 32 that sustainable development had been declared a "priority on the G20 agenda", but there was no clear and coherent discussion of environmental issues.

Overall, the G20 Hangzhou summit provided a platform for many countries, including China, and the United Nations to take SDGs to a new level, with agendas usually focused on issues such as trade, investment and macroeconomic stability. This summit has made greater progress in attaching importance to sustainable development than previous G20 summits.

Source: climate change Science dynamic Monitoring KuaiBao, Lanzhou Literature and Information Center, Chinese Academy of Sciences, No. 19, 2016. Please indicate the source.