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What the G7 summit could mean for the climate

  • G7 leaders meet in Germany to discuss the world’s most pressing issues, including Russia, a global food crisis and climate change.
  • The summit could lead to the formation of a “climate club” among member states.
  • The “climate club” can advance the decarbonization of high-emitting industries, rising carbon prices, and trade in low-carbon products.

With the leaders of the G7 nations meeting at Elmau Castle in the shadow of the Bavarian Alps, they will do so knowing that climate change means less and less snow on the iconic white-topped peaks each year. High on the agenda of the leaders of seven of the most industrialized nations will be the low-carbon transition of their economies and meeting the Paris Agreement’s 1.5°C global warming target.

Climate change is an urgent threat requiring decisive action. Communities around the world are already experiencing heightened climate impacts, from droughts to floods to rising seas. The World Economic Forum’s Global Risks Report continues to rank these environmental threats high on the list.

To limit the global temperature increase to well below 2°C and as close as possible to 1.5°C above pre-industrial levels, it is essential that businesses, policymakers and civil society advance short-term and long-term global climate actions in accordance with the objectives of the Paris Agreement on climate change.

The World Economic Forum Climate Initiative supports scaling and accelerating global climate action through public and private sector collaboration. The Initiative is working on several work streams to develop and implement inclusive and ambitious solutions.

This includes the Alliance of CEO Climate Leaders, a global network of business leaders from various industries developing cost-effective solutions for the transition to a low-carbon, climate-resilient economy. CEOs use their position and influence with policymakers and corporate partners to accelerate the transition and realize the economic benefits of a more secure climate.

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Thanks to net-zero emissions commitments since COP26, these countries have implemented thick and fast policy changes to phase out fossil fuels and decarbonize their economies. At the 2021 G7 gathering in the UK, leaders stressed the need to adapt their economies and mobilize finance to tackle climate change. Here they also set up the G7 2030 Nature Compact – a commitment to have 30% of the world’s land and 30% of the world’s oceans in conservation areas by 2030. Despite the need for G7 countries to hear on how to keep the pressure on Russia, and To help countries tackle soaring food prices, G7 President and German Chancellor Olaf Schulz is determined to leave the summit with concrete climate progress.

Create a “climate club”

Germany, as chair of the G7 this year, will focus the summit on sanctions against Russia and long-term plans to rebuild Ukraine. Alongside these important issues, the German president has proposed the idea of ​​a “climate club”, which, as with the promises of net zero and the pact for nature, seeks to build a global alliance between countries to deepen collaboration in delivering on their Paris Agreement promises. The climate club would involve governments working with the private sector on three fundamental pillars: putting a price on pollution, greening heavy industry and increasing trade in low-carbon products.

The war in Ukraine has created challenges for ambitious climate policy, with Germany declaring a gas crisis as Russia tightens the screws on Europe’s natural gas supply. Amid the unfolding energy crisis, Germany has also turned on the lights of coal-fired power plants. For one of the world’s most industrialized countries, which has made climate action a central part of its foreign policy, ensuring the security of energy systems will be a major concern at the summit.

G7 push to decarbonize industry and the First Movers Coalition

Ahead of the meeting, G7 ministers responsible for climate, energy and the environment gathered in Berlin to discuss the exacerbated impact of the Russian-Ukrainian war on energy systems and the fight against climate change. Ministers committed to a multilateral response to safeguard global energy security and to assist partner countries that may find themselves in dire straits due to gas pressure. On high-emitting industries, which account for 30% of global emissions, ministers said industrial decarbonisation needs to be accelerated if we want to stay below 1.5°C.

The world faces converging environmental crises: accelerating destruction of nature and climate change.

Natural Climate Solutions (NCS) – investments in conservation and land management programs that increase carbon storage and reduce carbon emissions – offer an important way to address both crises and generate environmental benefits and additional socials.

Research conducted for the Forum’s Nature and Net Zero report confirms estimates that NCS can provide a third of the climate mitigation to achieve a 1.5° and 2° trajectory by 2030, and at a lower cost to that of other forms of carbon dioxide removal. This report builds on the recommendations of the Task Force for Scaling Voluntary Carbon Markets and identifies six actions to accelerate the scale-up of high-quality NCS and unlock markets through the combined efforts of business leaders, policy makers and civil society.

To foster collaboration, in 2019 the Forum and the World Business Council for Sustainable Development came together to create the Natural Climate Solutions Alliance to bring together public and private stakeholders to identify opportunities and barriers. to the investment in NCS.

NCS Alliance member organizations contributed their expertise to develop the Natural Climate Solutions for Business, a high-level guide to the credible use of NCS credits by businesses.

Contact us to join our mission to unleash the power of nature.

Recognizing that we cannot make a full transition to a green economy with existing technologies alone, ministers stressed the need for rapid scaling up of near-zero technologies. This requires increased investment in research and development to transform polluting industries, which can lead to the creation of many new jobs. Policies to make trade in goods low-carbon such as mutual recognition of green standards were also highlighted. With governments often being the biggest purchasers of industrial materials like concrete and steel, ministers stressed the importance of sustainable and green procurement in accelerating technological change in heavy industry.

The World Economic Forum’s First Movers Coalition, which tackles pollution in “hard-to-reduce” industries, has been recognized by these G7 ministers as a key innovation support structure to reduce the costs of technologies to low carbon. At Davos 2022, more than 50 companies pledged to revamp their sourcing models to strictly buy aluminum, steel and other low- or no-carbon raw materials. Major players, including Ford and Volvo, have pledged that 10% of their aluminum purchases will be made with near-zero emissions by 2030.

Not only are these steps essential to protect us from disastrous global warming, but a recent study by We Mean Business and Cambridge Economics found that investing in a low-carbon economy will create new jobs, generate savings for households and create sustainable economic growth. The report estimates that by 2025, in G7 countries, the low-carbon transition could create up to 1,920,000 new jobs and lower energy bills by up to 25%.

Redistribute the price of pollution

At Davos 2022, policymakers and industry leaders held discussions on how proceeds from a pollution prize can accelerate the shift to a greener, fairer and more equitable society. Emphasis was placed on how a carbon price can help create viable carbon markets. The German government has been a strong supporter of the idea of ​​a minimum carbon price, pushing for a threshold of €60 per tonne of CO2, and carbon pricing could be a crucial way to boost investment in technology and infrastructure to transform the industry and reduce emissions.

Strong carbon markets can enable countries to finance climate action, while supporting the most vulnerable members of society. Companies can voluntarily disclose their emissions under Corporate Emissions Standards, the Paris Agreement and the Glasgow Climate Pact. Net Zero Tracker, however, found that only a third of the largest companies that have committed to net zero have implemented transparent low-carbon transition plans.

This lack of accountability means that some industry players can seriously jeopardize real climate progress. With the EU and UK already having emissions trading schemes in place, the German government is pushing for a minimum carbon price for countries to join the proposed “climate club”. Action by the other G7 members – the United States, Japan and Canada – is still needed.

With the EU and US having already abolished tariffs on trade in low-carbon steel and aluminum, the transition to carbon emissions in energy-intensive industries could receive a boost. major boost if all G7 economies commit. As major trading partners of many other countries, these tariff incentives could lead to the development of low-carbon industries in other countries.

As G7 leaders gather in the Bavarian Alps to discuss Russia, the food crisis and the climate crisis, they must remember that deep climate collaboration can transform our societies to be more equitable, healthy and resilient.