Over Labor Day weekend we may hear major climate change news from Hangzhou, China. That’s where the G20 leaders will be meeting to work their way through a number of major issues. Negotiators for the United States and China have been trying to agree on terms for ratification of the Paris climate accord so that they can announce it in Hangzhou or in the days leading up to the summit.
If they manage to do so, the two countries would be in a position to push the other G20 members to follow their lead. The 20 economies represent 77 percent of the world's greenhouse gas emissions, according to the World Resources Institute (WRI). In an issue paper, the nonprofit Center for American Progress (CAP) said it would like to see the G20 take leadership in dealing with climate change, ending a period of "ambivalence" on climate change and moving "toward coherence."
An August 25 report in the South China Morning Post suggested that the U.S. and China will formally join the Paris climate agreement in the days leading up to the summit. The two nations account for about 38 per cent of global greenhouse gas emissions, according to WRI.
By ratifying the Paris Agreement on climate change, Beijing and Washington could generate momentum for the accord to come into effect as a binding international treaty. The treaty will enter into force only after 55 countries representing at least 55 per cent of emissions ratify or join the deal in other ways. So far, 23 nations have joined, but they account for just 1 per cent of emissions.
On August 24 investors managing more than $13 trillion of assets urged the G20 leaders to ratify the Paris accord before year’s end. The Institutional Investors Group on Climate Change, made up of 130 investors from a variety of countries, also called for the G20 to double global investment in clean energy, develop carbon pricing, and phase out fossil fuel subsidies.
Subsequently, a collection of insurers, with assets of $1.2 trillion, challenged the G20 leaders to set a timetable to phase out subsidies for fossil fuels by 2020. "Climate change in particular represents the mother of all risks," said Aviva CEO Mark Wilson.
A British-based think tank, the Overseas Development Institute, has estimated that average annual subsidies for fossil fuel production were $444 billion in 2013 and 2014, roughly four times the subsidies for renewable energy in 2013.
The summit will be the most significant gathering of world leaders in Chinese history, and the host country is eager for this summit to reflect positively on China, Reuters reported August 30: “State media has given great play to the idea that G20 is for China to show leadership in shaping global governance rules and forging ahead with sustainable global growth, with the official People's Daily saying this could be one of the G20's most fruitful ever get-togethers.” Among the leaders scheduled to attend are President Obama and Japanese Prime Minister Shinzo Abe. But China is concerned that certain countries may try to steer the focus toward the South China Sea controversy, the Trans-Pacific Partnership (TPP), and other matters that the Chinese are not inclined to dwell on.
Whenever the United States ratifies the Paris agreement--and the White House has promised action this year--the pressure to come up with a plan to honor the nation’s pledge will intensify. The new Congress and new president will need to decide whether to continue to emphasize regulatory solutions or move to a market-driven approach by putting a price on carbon, as most economists advise.