Climate change and the now largely market-driven transformation of the energy sector create financial stress in the fossil fuel and nuclear industries as well as in countries that export fossil commodities or will have obsolete nuclear plants on their territory. The risks are systemic and may lead to contagion or knock-on effects that could destabilize the global financial system. In consequence, energy should no longer be left primarily to the Group of Twenty (G20) “Sherpa track,” but should be included prominently in the “finance track” as a matter for finance ministers and central bank governors. The G20 has addressed energy policy since 2012 in a mix of initiatives that seek to both protect the incumbent dirty and dangerous industries and their subsidies and privileges, and stimulate a transformation to clean, safe and sustainable energy systems. With changing economic realities, an ambitious G20 green energy shift is now overdue. Past G20 presidencies of countries that are exporters of fossil energy commodities were largely protective of incumbent businesses. China — as an energy-importing country — has begun to refocus the G20 energy agenda on sustainability. Germany now has an opportunity to complete that shift.
Energy in the G20 Finance Track: G20 Energy Transformation during the German Presidency
CIGI Policy Brief No. 86