The Group of 7 (G7) leaders representing the United States, Britain, Canada, France, Germany, Italy, and Japan met in Cornwall, United Kingdom on June 11-13, 2021, for their first in-person summit since the outbreak of the COVID-19 pandemic. Unlike previous summits, climate change was a main area for discussion.
During the Summit the leaders released a communique pledging to take aggressive action to limit global temperature rise by cutting collective emissions in half by 2030 and to advance international climate financing. The G7 also agreed to stop international funding for any coal project that lacked technology to capture and store carbon dioxide by next year but stopped short of setting a firm end date for the burning of coal, the largest global contributor to carbon dioxide emissions causing global warming.
Financing for Climate and Infrastructure
During the Summit, the G7 leaders recommitted to raising their contributions to meet a previous $100 billion a year climate finance pledge to help poor countries cut carbon emissions and prepare for global warming. However, many have criticized this commitment since the G7 countries have fallen short this financing promise since it was first made more than a decade ago in 2009.
The G7 also committed to catalyzing billions of dollars for a “Build Back Better World” (B3W) project including massive global infrastructure investments in low- and middle-income countries as a way to strategically compete with China’s Belt and Road infrastructure initiative (BRI).
It will be necessary for the U.S. and G7 leaders to “build back better” their credibility by ensuring that their pledges will lead to concrete policy, action, and financing. They can do this by fully executing their $100 billion climate financing pledge.
Canada and Germany have already announced increased climate financing contributions, with Canada promising to double its pledge to 5.3 billion CAD ($4.4 billion) during the next five years. Germany pledged to increase its funding to 6 billion euros ($7.26 billion) a year by 2025 at the latest.
President Biden issued an Executive Order in April promising to double climate financing to developing countries by 2024. Previous U.S. international public climate finance averaged around $2.8 billion a year during the baseline period from fiscal 2013-2017 so the E.O. is effectively committing to financing $5.6 billion a year by 2024. While this increase is a positive development, it falls far short of the G7’s $100 billion a year pledge.
Will G7 Commitments Pressure China to Curb Coal Use?
The G7 made it clear that any funding for B3W and multilateral development will not finance coal unless carbon capture technology is available, which seems unlikely since carbon capture technology is nascent and not widely used. They also pledged $2 billion to help nations pivot away from fossil fuels. However, without a specific end date for the G7 countries’ own use of coal, it will be hard to pressure China on its coal dependency in the lead up to the UN Climate Change Conference of the Parties (COP26) in Glasgow in November.
To increase this pressure, the U.S. must further develop its financing mechanisms to help transition the global economy away from coal through three strategies:
- Gain Congressional financing to implement President Biden’s commitments to doubling global climate financing and investing in the global renewable energy transition by incorporating the resources of several U.S. government agencies like USAID.
- Mobilize investments in renewable energy. The U.S. must also live up to its commitments to mobilize investments in the renewable energy sector and the transition away from coal through the U.S. International Development Finance Corporation (DFC). In April, DFC issued a call for applications from private companies seeking investments in renewable energy projects. DFC has also committed to focusing at least 33 percent of new investments on climate-related projects by fiscal year 2023 and to committing at least $50 million in technical assistance for climate projects over the next five years.
- Join the World Bank Program for Energy Transition and Coal Phase-Out. Both Canada and the United Kingdom are already funding this initiative to help developing countries move away from coal and embrace cleaner sources of energy.
Through these funding mechanisms the U.S. can work with G7 countries to grow renewable energy capabilities which often require large capital expenditures for transmission infrastructure. The U.S. can play a role by facilitating larger investments from the international community the U.S. can compete with China in developing the renewable energy sector.
Beyond Financing: Boasting Global Climate Resiliency
Beyond financing, the U.S. and G7 governments can bolster global resilience to increasingly severe climate threats (floods, drought, food insecurity, etc.). The U.S. must:
- Enhance G7 cooperation, capacity and information sharing to prepare for and respond to climate threats. This could entail holding annual reviews to coordinate policies and exchange best practices and lessons learned, investing in new research, or refining and promoting a global climate risk assessment methodology.
- Encourage G7 collaboration with multilateral institutions like the United Nations and World Bank to improve the guidance for national climate adaptation planning, and to ensure that developing countries have the technical and financial support they need. This must entail concrete financing and technical commitments from the U.S. and G7 countries during COP26.
- Partner for climate resiliency by improving coordination not only within the G7 but also with partner states, local governments, and non-state actors to ensure that global initiatives improve local resilience to climate risks. This work can be led by the G7 task force and pursued in global fora such as the upcoming COP26 and subsequent meetings of the United Nations Framework Convention on Climate Change (UNFCCC).
By investing in these initiatives, the U.S. will enhance global and national security strategies to deal with the increasing threats of climate change. Providing ambitious climate financing and technical support will also increase US standing and soft power throughout the world and help stop climate change.