As the 2016 Hangzhou G20 came to a close on Sunday, there was a bit of good news for mitigating climate change. The world’s two largest emitters, the US and China, have jointly confirmed the ratification of the Paris Agreement, a commitment that brings the number of ratifications closer to the threshold of 55 countries accounting for 55 per cent of global carbon emissions required for the legal agreement to enter into force.
But when it comes to the G20 major emitters agreeing on clear deadlines to raise mitigation ambition, they fail to show significant progress. At the Hangzhou Summit, for example, G20 leaders missed an important opportunity to walk the talk by not taking decisive action on the question of phasing out fossil fuel subsidies. The final communique of the Summit contained only vague language that reaffirms their “commitment to rationalize and phase out inefficient fossil fuel subsidies that encourage wasteful consumption over the medium term, recognizing the need to support the poor” without any hint of a concrete timeframe for action.
Few issues related to climate action generate such a high level of theoretical agreement than the need for the international community to tackle fossil fuel subsidy reform. The 2015 IEA’s World Energy and Climate Change Outlook included the phase out of fossil fuel subsidies among its key recommendations for the global community to achieve the agreed upon target of limiting global warming to 2 degrees Celsius. – a recommendation that’s even more apropos for the more stringent efforts to keep temperatures under 1.5 degrees Celsius rise as enshrined in the Paris Agreement. A 2015 IMF report concluded that fossil fuel subsidy removal and appropriate taxation would generate “very substantial” gains for the environment, revenue collection and welfare, and that it should begin immediately. A recent Bloomberg editorial called fuel subsidies “the world’s dumbest policy.” The list goes on.
Since 2009 the G20 has supported these reports by committing to the phase out of fuel subsidies, in special when it does not aim to protect the poor. The UN and the EU have also long expressed their support for immediate phase out. Yet, despite all this momentum, G20 leaders did not move the issue forward in the 2016 Summit. Action by major emitters in political forums such as the G20 are vital to the successful implementation of the Paris Agreement. This reality makes the lack of action on phasing out fuel subsidies in Hangzhou especially concerning.
The 2015 Paris Agreement has been rightly hailed as an important breakthrough in multilateral negotiations for global climate action. Yet, it is widely recognized that the legal agreement offers only a platform for action, as the mitigation pledges that countries presented in Paris are voluntary and insufficient to meet the collective goal of keeping temperatures well below 2 degrees Celsius. In order to stand a chance to meet the Paris Agreement temperature goal, all countries, but especially the major emitters, need to raise their individual and collective ambitions. The Paris Agreement has incorporated multilateral institutional mechanisms to facilitate raising of ambition, including global stocktaking, a strong transparency system and a pledge and review system that will be further developed in the upcoming Conference of Parties (COP 22) in Marrakesh next November.
However, raising mitigation ambition under the multilateral system of the UNFCCC is a tall task, due to the serious challenge of bargaining among a large number of countries with diverse socio-economic profiles, interests and capabilities. This challenge is compounded by the UNFCCC existing consensual decision-making rules, which enables one single country to veto an almost universal consensus at the global climate regime. This climate governance challenge likely contributed to the form of the Paris Agreement being an agreement on common goals and principles, with individual states pledging nationally determined commitments.
These challenges of the multilateral system make action by major emitters through climate clubs such as the Major Economies Forum and the G20 essential complements to the Paris Agreement. Besides being the primary global political forum to discuss global economic challenges, as it was originally designed to do, the G20 is also a logical forum for major emitters to collectively consider and coordinate action to raise ambitions in climate change. G20 leaders would send an extraordinarily positive signal about the future implementation of the Paris Agreement if they could agree on a clear program to phase out fossil fuel subsidies in the next Summit to take place in 2017 in Hamburg, Germany.