Comment: G20 speaks on climate and energy – barely

Publish date: November 16, 2010

MOSCOW – The November 11-12 summit of the Group of Twenty (G20) in Seoul, South Korea, was a complete fiasco where climate change was concerned: Though they were on the agenda, climate and energy issues featured poorly in the summit’s adopted documents. But G20 leaders did stay the course of discontinuing subsidies for fossil fuels.

A press release on the summit, posted on the official website of the President of the Russian Federation, Dmitry Medvedev, said: “The G20 heads of state and government held a working session, focusing primarily on global economic issues, international trade, and climate change.”

Yet it was difficult to find any mention of climate issues in summit documents, and what was mentioned was highly disappointing.

G20 meetings bring together annually finance ministers and heads of state of both industrialised nations and developing economies in order to discuss key issues of global economic stability. Quite a few documents were adopted at the Seoul meeting: a Summit Declaration, a Framework Agreement for Strong, Sustainable and Balanced Growth, a document called the “Seoul Action Plan,” and documents on reforming the international financial organisations, modernising the International Monetary Fund, combating protectionism, and encouraging trade and investment, according to the press release. Three additional documents were also adopted, the statement said: the Seoul development consensus for shared growth, the G20 anti-corruption action plan, and a development action plan for the coming few years.

The author of this comment has researched carefully all the documents that came out of the summit in search of all possible mentions of climate or energy. Of course, the main emphasis in these papers is placed on issues related to the global financial system and world trade. The discussion encompasses such topics as economic stimulus spending and monetary and credit easing; the creation of a stable global monetary system and a new system of financial regulation; controlling the activities of hedge-funds, over-the-counter derivatives, and credit rating agencies; and even reducing the average transfer fee for money sent home by migrant workers.

The goal of the summit is to “contribute to the recovery of global economy so as to ensure its fast, secure, sustained, and comprehensive growth.” In fact, the word “growth” features prominently in almost all summit documents. What it has to do with, predominantly, is economic growth and measures to achieve it.

But the very end of the document entitled “Framework for Strong, Sustainable and Balanced Growth”(download to right) includes a section called “Climate Change and Green Growth.” It only has three paragraphs and starts with the following:

Climate change

Paragraph 66: “Addressing the threat of global climate change is an urgent priority for all nations. We reiterate our commitment to take strong and action-oriented measures and remain fully dedicated to UN climate change negotiations. We reaffirm the objective, provisions, and the principles of the UN Framework Convention on Climate Change (UNFCCC), including common but differentiated responsibilities and respective capabilities. […] We all are committed to achieving a successful, balanced result that includes the core issues of mitigation, transparency, finance, technology, adaptation, and forest preservation […]

And that’s all she wrote on climate per se – nothing beyond declaring the obvious, which is that the participating countries are involved in the UNFCCC and climate negotiations as part of that convention. There is no mention in the text of the Kyoto Protocol – or that the first emission reduction deadline expires in 2012 and that the negotiations are supposed to be the means of finding new mechanisms to mitigate global climate effects in the post-Kyoto period.

All G20 leaders are aware of this, but they were unable even to agree on at least some sort of mention of the Kyoto Protocol and future commitments to emission cuts. So the end result is that the parties “remain fully dedicated to UN climate change negotiations,” but whether they are dedicated to emission reduction commitments is something left beyond the margins of the text.

Some signal they give to their climate negotiators! The hope that G20 leaders would, as they did before, push the negotiations forward – and instruct their negotiators to stop negotiating and start agreeing – alas, fell through.  
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In a November 12 press release headlined “G20: Seoul consensus fails to commit to energy revolution,” Greenpeace deplored the summit’s results that showed “G20 has once again failed to take the path of green development that the world economy and the environment desperately needs.”

While “the final G20 Communiqué calls for a successful, balanced result of the climate negotiations in [Mexico’s] Cancun [later this year],” Jasper Inventor, Greenpeace International climate campaigner from the Philippines, believes that “the G20 climate agreement is meaningless rhetoric unless leaders agree to fund a climate-friendly economy with drastically reduced greenhouse gas emissions. Today’s G20 statement has done nothing to advance the global climate negotiations, set to resume in two weeks in Cancun, Mexico.”

To complete this disappointing picture, no questions were asked on climate or energy during Russian President Dmitry Medvedev’s press conference after the summit. Though that in itself is scarcely a surprise: Medvedev could hardly be mistaken for a “climate leader.”


Paragraph 67: “The ongoing loss of biodiversity is a global environmental and economic challenge. Both climate change and loss of biodiversity are inextricably linked. We acknowledge the outcomes of the global study on the economics of ecosystems and biodiversity. We welcome the successful conclusion of [the 10th Conference of Parties to the Convention on Biological Diversity] in [Japan’s] Nagoya.

Same situation. G20 leaders are well aware of the “ongoing loss of biodiversity” but have nothing specific to say on any promises to do anything about it.

Green growth

What is more interesting is the inclusion into the summit documents of the issue of green growth. Usually this concept implies reduction in the consumption of resources, including energy resources – so-called “de-growth.” But in order to avoid having to discuss ways to limit their own economic growth, the rich nations of the G20 – as it often happens – have resorted to exploiting  the interests of the poor ones as a cover strategy: It is growth, not de-growth, that the poorer, developing nations would benefit most from, is it not? …

Paragraph 68: “We are committed to support country-led green growth policies that promote environmentally sustainable global growth along with employment creation while ensuring energy access for the poor. We recognize that sustainable green growth, as it is inherently a part of sustainable development, is a strategy of quality development, enabling countries to leapfrog old technologies in many sectors, including through the use of energy efficiency and clean technology. To that end, we will take steps to create, as appropriate, the enabling environments that are conducive to the development and deployment of energy efficiency and clean energy technologies, including policies and practices in our countries and beyond, including technical transfer and capacity building. We support the ongoing initiatives under the Clean Energy Ministerial and encourage further discussion on cooperation in R&D and regulatory measures, together with business leaders, and ask our Energy Experts Group to monitor and report back to us on progress at the 2011 Summit in France. We also commit to stimulate investment in clean energy technology, energy and resource efficiency, green transportation, and green cities by mobilizing finance, establishing clear and consistent standards, developing long-term energy policies, supporting education, enterprise and R&D, and continuing to promote cross-border collaboration and coordination of national legislative approaches.”

Here the language, compared to the paragraph on climate, is meatier, at a first glance – but though the words are many, the meaning is foggy. It is possible that some of the G20 members do want to make global economy greener. But for others, this seems to be no reason to change anything – rather just a way to slap green labels onto old and dangerous technologies, such as “clean” coal or “safe” nuclear energy.

The scandal hidden in these wordy sentences is that though they speak of “clean energy,” the leaders never specify what they mean by it. Why was nothing at all said about renewable energy?

“The G20 say that they ‘commit to stimulate investment in clean energy technology’ – but how serious are they? Eight million jobs could be created by 2030 if governments truly backed renewable energy and energy efficiency. In Seoul, they merely recycled old economic ideas and tried to pass them off as new by adding a green tinge,” said Daniel Mittler, Political Director of Greenpeace International, in that organisation’s November 12 press release on the results of the Seoul summit.

Renewable energy

By some sort of miracle, a mention of renewable energy did find its way into the summit documents. In an appendix to the G20 Summit Declaration, called “Annex II: Multi-Year Action Plan on Development,” (download to right) the group requests, under the heading “Infrastructure”, that “ regional development banks […] and the World Bank Group (collectively, multilateral development banks […]) work jointly to prepare action plans that increase public, semi-public and private finance and improve implementation of national and regional infrastructure projects, including in energy, transport, communications, and water, in developing countries,” low-income countries in particular, with the aim of pursuing actions in five particular areas.

One of these areas, which falls under the category of “Improving the domestic infrastructure investment climate,” specifies that the work in cooperation with low-income countries will be done in order to “increase [by November 2011] energy access, including by supporting more sustainable paths that make maximum use of cost effective renewable energy and resources, support energy conservation, and increase efficiency.”

Fossil fuel subsidies

But while lacking in other respects, summit documents do provide something other than mere words and declarations – such as a concrete promise to work toward discontinuing fossil fuel subsidies. The G20 Framework for Strong, Sustainable and Balanced Growth says the following:

Paragraph 58: “We reaffirm our commitment to rationalize and phase-out over the medium term inefficient fossil fuel subsidies that encourage wasteful consumption, with timing based on national circumstances, while providing targeted support for the poorest. We direct our Finance and Energy Ministers to report back on the progress made in implementing country-specific strategies and in achieving the goals to which we agreed in Pittsburgh and Toronto at the 2011 Summit in France.”

Fossil fuel subsidies tilt the playing field in favour of some energy industries and to the detriment of other fields, thus impeding healthy competition and the growth of renewable energy. One of the results of the G20 Pittsburgh, US summit, which took place in September 2009, was a decision to prepare a report on the subject and start working on an action plan to discontinue fossil fuel subsidies.

And the Toronto, Canada, meeting, which took place this past summer, was marked by the presentation of a report entitled  “Analysis of the Scope of Energy Subsidies and Suggestions for the G20 Initiative” (download to right) and written jointly by the International Energy Agency (IEA), the Organisation of the Petroleum Exporting Countries (OPEC), Organisation for Economic Cooperation and Development (OECD), and the World Bank.

The situation with fossil fuel subsidies is not entirely clear-cut, according to the report. As part of some background information provided at the beginning, the report’s authors note that subsidies are one of many policy instruments used by governments to attain economic, social and environmental objectives, and that energy subsidies, in particular, are often used to alleviate energy poverty and promote economic development by enabling access to affordable modern energy services.

They warn that the “reform of inefficient energy subsidies should be analyzed in a context, including their links to the three pillars of sustainable development, including economic growth, poverty reduction and environmental dimensions. Taking into account the sovereign rights of countries to develop economic and social policies, subsidies are fundamentally country-specific, and should be based on national circumstances.”

The report also notes a lack of “systematic reporting of energy subsidies at the international level,” as well as “gaps and limitations in the measurement and estimation currently available for energy subsidies at the global level.” It does, however, provide certain specific figures to illustrate the current situation.

It says, for instance, that “using the price-gap methodology, the IEA estimates that fossil-fuel-related consumption subsidies amounted to $557 billion in 2008 (IEA, 2010). Based on IEA analysis, if these subsidies were phased out by 2020 it would result in a reduction in primary energy demand at the global level of 5.8% and a fall in energy-related carbon-dioxide emissions of 6.9%, compared with a baseline in which subsidy rates remain unchanged.”

That said, OPEC disputes the methodology used and “could not associate itself with the above estimation of fossil-fuel-related consumption subsidies.”

Furthermore, the value of petroleum subsidies to consumers, in particular, though it increased dramatically in recent years, largely as a result of rising oil prices, has been projected to decline to $240 billion in 2010, the report said, citing volatile oil prices as the cause of the recent hike.

Subsidies provided to producers of fossil fuels may be on the order of $100 billion per year and the total order of magnitude of subsidies to consumers and producers – almost $700 billion a year – is roughly equivalent to 1% of world GDP, the report said.

Compared to these figures, subsidies on renewable energy look small, but the information provided in the report is encouraging: “Subsidies to other non-fossil-fuel energy are considerable and have been increasing over time. A rough estimate by the Global Subsidies Initiative (GSI) indicates around US$ 100 billion per year are spent to subsidise alternatives to fossil fuels. Based on this, OPEC estimates that renewable energy sources and biofuels are subsidised at a much higher rate than fossil fuels. The per unit basis subsidies to renewables and biofuels are equal to US cents 5.0 per kWh, compared with US cents 1.7 per kWh for nuclear power, and US cents 0.8 per kWh for fossil fuels.”

Poorly implemented energy subsidies are economically costly to taxpayers and can damage the environment through increased emissions of greenhouse gas and other air pollutants, the authors continue. “Recent OECD and IEA analyses indicate that phasing-out fossil fuel subsidies could lead to a 10% reduction in global greenhouse-gas emissions in 2050 compared with business-as-usual.”

To highlight other reasons in favour of phasing out fossil fuel subsidies, several studies cited in the report indicate that they tend to benefit high-income households more than the poor, due to the former’s higher consumption levels. Yet, “some subsidies related to fossil fuels can improve the environment or the welfare of the poor if they encourage reduced reliance on biomass in areas at risk of deforestation, and fund research into ways to sequester carbon emissions from combustion,” the report notes.

Strangely enough, the Russian public and the population of the former Soviet bloc may be better informed about subsidies for renewable energy while receiving next to no information on the far greater scope of subsidies provided for the gas-, coal-, oil-, and uranium-based energy industries in Russia.

If the G20 plan regarding fossil fuel subsidies is put into motion, this is likely to impact first and foremost the interests of the Russian gas giant Gazprom and the national coal companies. It is just as likely, on the other hand, that the efforts will eventually be limited to preparation of reports and analyses, with no specific actions in sight.

What about phasing out nuclear subsidies?

Though uranium – the fuel that nuclear energy is based on – will undoubtedly fall into the category of fossil fuels, the prospects of discontinuing uranium subsidies and the use of the “peaceful atom” is not an issue that is frequently raised during the G20 meetings. Subsidising the nuclear energy industry is the existing reality for many participating nations.

And according to the data cited by the “Analysis of the Scope of Energy Subsidies,…” in certain respects, spending on nuclear energy is at a much higher level than what other types of fuel receive. For instance, a table of government expenditure on R&D by total IEA countries and selected G-20 countries between 2005 and 2008 shows that spending on R&D related to fossil fuels was $1.658 billion in 2008, R&D related to renewable energy sources, hydrogen, and fuel cells fared slightly better – $1.755 billion, while spending on R&D related to energy for civilian purposes from nuclear fission and fusion totalled three times as much: $5.476 billion.

“Fossil fuels are by no means the only forms of energy that governments subsidise. Countries with large fission nuclear power programmes incurred large costs in the form of expenditure on R&D and loans, loan guarantees, and grants for the construction of new power plants […]. Government expenditure on nuclear-power-related R&D (both fission and fusion) has been increasing steadily in recent years […], as have government loan guarantees,” the report said.

Nuclear research and development is not the only area where subsidies for nuclear energy are directed: State support is also provided to nuclear energy producers. And though the level of subsidies for renewable energy and biofuels are higher – at US cents 5.0 per kWh – those that sustain nuclear energy production remain considerable enough, at the earlier cited US cents 1.7 per kWh, and still higher than the US cents 0.8 per kWh for fossil fuels.

According to the Russian Ministry of Energy, the total output of Russia’s ten nuclear power plants in 2009 was 163.5 billion kilowatt-hours of energy. Assuming that the level of government spending on nuclear power plants in Russia does not exceed global rates, that spending would amount annually to $2.78 billion (163.5 billion kilowatt-hours multiplied by $0.017). In reality, this could be a much higher amount – likely, of the order of around $3 billion in state subsidies for the operation of nuclear power plants.

These facts are something that proponents of nuclear energy – of whom there are many among G20 leaders – would rather never become broadly discussed public knowledge. Many G20 leaders are part of nuclear PR campaigns, lending their support to false claims of nuclear energy’s commercial profitability. But these are facts provided by respectable international organisations: Nuclear energy does need government subsidies, and is subsidised at a higher level than the lucrative fossil fuel industries. No amount of disputing would make these data go away.

One hopes that now that a phase-out of inefficient and damaging fossil fuel subsidies is finally firmly on the G20 leaders’ agenda, the same fate will someday soon await state support for nuclear energy as well.

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