31 Mar 2023
The foundation for sustainable economic growth relies on four determinants: people, natural resources, capital, and technology. Over the years, this foundation has been instrumental in uplifting billions of people out of poverty, particularly in the G20 countries. However, to sustain this progress, it is essential to build on the decisions made during previous COPs and G20 summits, ensuring their successful implementation on a global scale.
One critical aspect of this implementation is transitioning towards low-carbon pathways across different sectors within the G20 nations. Businesses can play a crucial role in this transition, but it is essential to have the necessary support from respective governments and policymakers. The goals driving this energy transition are diverse and include innovative and diversified energy solutions, such as hydrogen and allied opportunities, reduced dependence on fossil fuels, improved energy storage, and better access to finance.
Without global collaborations and building resilient, resource efficient and green supply chains, it would be very challenging to be able to meet goal of limiting global temperature rise to 1.5°C.
Challenges and India Perspective
While there is a strong growth in momentum for new and emerging clean energy technologies indicated clearly by strengthened international and national climate ambitions, there is also an increasing and urgent need for improved access to capital, holistic and synergistic regulatory frameworks and enhanced international cooperation to overcome the barriers to large-scale deployment and to accelerate the pathway to net-zero.
Another key challenge for businesses is minimizing climate-related risks associated with their supply chains. Structural weaknesses in existing supply chain models have highlighted the need for industry-wide reinvention. Addressing this issue will be vital to achieve a competitive advantage in an unpredictable and ever-changing environment.
The key factors that could help businesses achieve tangible results through supportive policies and favourable investment conditions across all member countries include energy transition, resource efficiency, and just transitions.
Energy Transition
The G20 countries have a significant role to play in the development and deployment of Carbon Capture, Utilization, and Storage (CCUS) technologies to achieve their respective net-zero emissions goals. Significant investment and deployment of CCUS technology are required to meet the Paris Agreement’s climate targets. The global investment in CCUS must increase to $27 billion by 2030 and $160 billion by 2050 for widespread CCUS deployment in industrial processes, power generation, and hydrogen production.
Nations and businesses must collaborate to accelerate technology development, reduce costs, and achieve emission reduction targets through a coordinated approach to CCUS deployment.
There is also a need to take swift action in implementing low carbon technologies and creating a resilient and adaptable transition that ensures sustainable economic growth across all member countries. To achieve this, it is crucial to establish an effective and predictable policy environment that acts as a catalyst in meeting respective NDC targets. Moreover, businesses must have access to finance to facilitate this transition.
Collaboration and investment in clean energy technologies among G20 countries are essential to achieve a sustainable energy future. The G20 countries can work together to create an effective framework for the transition to clean energy sources, with policies that promote the adoption of low carbon technologies and encourage investment in renewable energy. Such a framework should also address the needs of developing countries, who may require additional support to implement the transition.
The Ministry of Power in India has recently unveiled an ambitious energy transition strategy with the goal of achieving net-zero emissions by 2070 and reducing the country’s carbon intensity by 45% by 2030. India’s move comes as it grapples with the severe impacts of climate change, including rising temperatures, erratic weather patterns, and extreme weather events. To achieve these targets, the energy transition strategy aims to increase the share of renewable energy in the electricity mix from the current 37% to 50% by 2030. This can be achieved by scaling up the use of solar and wind energy, as well as increasing the deployment of energy storage systems.
The plan also includes measures to promote energy-efficient practices, such as the adoption of smart meters and building codes that promote energy conservation. The strategy also aims to promote the use of electric vehicles (EVs) to reduce the dependence on fossil fuels in the transportation sector. The government plans to introduce policies to incentivize the adoption of EVs, such as tax rebates, subsidies, and the development of charging infrastructure. The plan also includes measures to promote the use of cleaner fuels in the industrial sector, such as hydrogen, biofuels, and synthetic fuels.
Climate Finance
The issue of climate change finance is a critical challenge for the global community, and the G20 countries have a crucial role to play in addressing it. According to recent estimates, annual climate finance needs in developing countries are likely to range from USD 140 billion to USD 300 billion by 2030. G20 countries, as major economies, must contribute to meeting these targets by increasing their climate finance commitments.
This can be achieved through mobilizing public and private finance, as well as by leveraging innovative financing mechanisms. For example, green bonds and sustainable finance instruments can be used to finance low-carbon infrastructure projects. Moreover, countries can also collaborate with developing countries to build capacity and promote knowledge-sharing on climate finance.
Resource Efficiency and Circular Economy
G20 countries generate 60% of the world’s waste, with per capita waste generation varying greatly between countries. There are opportunities for the G20 to improve their resource productivity and move towards a more circular economy, which could bring significant economic benefits. By adopting circular economy principles such as reducing waste, reusing materials, and recycling, the G20 could save up to $1.8 trillion by 2030 and create over 3 million jobs. Furthermore, by improving their waste management practices, the G20 could reduce greenhouse gas emissions by up to 20%, contributing significantly to global efforts to tackle climate change. Collaboration and knowledge-sharing among G20 countries is essential to accelerate progress towards a more circular economy.
To facilitate this transition, the B20 can take the lead in identifying and prioritizing actions for G20 government action, as well as allocating financial resources to support and pilot innovative solutions. There is a need for a significant reduction in reliance on fresh extraction of natural resources, and instead, residual economic value must be recovered both during production and at the end of the useful life.
The Resource Efficiency and Circular Economy Strategy (recommendation) was given by the Indian government for enhancing the resource-use efficiency in the Indian economy and industry, develop indicators for monitoring progress, and create an ecosystem for improving the resource security and minimizing environmental impacts. This was also in line with the government’s commitment to the goals of sustainability.
To achieve global sustainability goals, it is imperative to enhance international cooperation by empowering Multilateral Development Banks (MDBs), making low-cost financing available, giving specific attention to MSMEs and devising policies at national and international levels for faster adoption of the circular economy business model. These considerations are critical in advancing the global energy transition, and the B20 engagement group can play a pivotal role in achieving this objective.
This article was first published in Partnership Summit: Collaborative Frameworks.