Trillions needed from the G7 and G20 for the climate emergency
The world must rapidly raise trillions of dollars for a just clean energy transition and nature conservation amid the current climate change crisis. In parallel, it must also begin the long overdue careful planning and action needed to end all financial investments and infrastructure in fossil fuels.
Here the G7 and G20 members play a central role, accounting for about 45% and 80% of global gross domestic product, respectively. The supply chains of these clubs’ energy and extractive industries have tentacles that span the world; their members’ historical and projected emissions have systemic significance for destabilising the climate system that cannot be understated in terms of its impacts on human, animal and plant health and well-being. The G20 – which includes all G7 members – accounts for nearly 80% of all global emissions.
A closer look at their compliance
Despite this wildly disproportionate contribution – just 19 countries and the multinational fossil fuel companies headquartered in them, throwing an entire planetary system out of equilibrium – the G20’s compliance with its climate finance commitments is underwhelming, averaging only 66%.
The G7 performs better with its own such commitments, with 73% compliance. These percentages reflect the clubs’ compliance with commitments to increase climate financing, including through contributing to recognised international climate funds such as the Green Climate Fund, providing adaptation financing or unlocking private sector climate investments.
That compliance also includes G7 and G20 efforts to meet their oft-repeated commitment to raise $100 billion annually for developing countries by 2020, a deadline later extended to 2025. The G20 Research Group’s research does show steady progress towards this goal. On average, the G7’s compliance with this commitment, from the four years tracked, stands at 77%.
However, the G20’s compliance, tracked over two years, is a meagre 46%. These numbers are corroborated by Oxfam, which found the G20 members are failing to do their fair share to respond to the climate emergency. Still, according to the Organisation for Economic Co-operation and Development, as of spring 2024, developed countries did finally meet and surpass their $100 billion goal. This pledge is long overdue, but much more is needed now.
Eradicating subsidies
To respond effectively to the climate emergency, in addition to increasing climate finance, countries must also decrease fossil fuel subsidies. Since the G20’s 2009 Pittsburgh Summit, its members have committed “to phase-out and rationalize over the medium term inefficient fossil fuel subsidies while providing targeted support for the poorest”. The term ‘inefficient’ provides the biggest loophole for selective interpretation by each member, and presents a challenge for monitoring. The G20 Research Group tracked progress towards this commitment from 2009 to 2016 and again in 2020, and found compliance averaged a low 55%.
Moreover, the G20 members continue to provide record amounts of financial incentives and subsidies to fossil fuel companies, allocating a staggering $1.4 trillion in 2022, citing geopolitical and health crises as justification.
In 2021, the G7 and G20 both committed to advance the transition away from coal by ending the provision of international public financing for new unabated coal power generation by the end of that year, including through official development assistance, export finance, investment, and financial trade and promotion support. The G20 had very low compliance with this commitment, with 33%. As subsets, G7 countries had higher compliance, with 69%, and the BRICS members of Brazil, Russia, India, China and South Africa made little to no progress at all.
Overall, from 1975 to 2024, the G7 has given an average of 458 words to climate finance at each of its annual summits, and its commitments on the subject have taken an average of 2% of the total of all subjects. Despite being a younger institution, the G20 mirrors the G7. The G20, at its annual summits from 2008 to 2023, averages almost the same per summit with 452 words, and its climate finance commitments also take an average of 2%.
Catalysing the change
There are many actions the G7 and G20 members should take to further boost climate financing and catalyse a decrease in fossil fuel funding.
Experts around the world have made numerous recommendations to the G7 and G20 on how to advance these mission-critical goals. These wealthy clubs have access to the best and the brightest minds and control the world’s most powerful financial institutions and government coffers. Leaders have heard the recommendations time and again, and control the resources to execute them. If they do not implement these recommendations, it is due to political factors rather than practical ones. Various estimates put the need for climate finance between $5.8 trillion and $13.6 trillion. The G7 and G20 must stop making excuses and lead here.
