What will the G7 summit mean for energy security and climate action?

Pictured: German Federal Chancellor Scholz in discussion with members of Business7 ahead of this weekend's Summit. Image: German Federal Government/Denzel

World leaders, protestors, thinktanks and businesses alike are gearing up for the G7 Summit to begin this Sunday (26 June). Here, edie looks at who is involved with the key event, what will be discussed, and whether Berlin presents an opportunity to make strong, joined-up commitments to deliver a sustainable future.

What is the G7 Summit and why is it being held in Berlin?

The G7 consists of the world’s seven largest economies – the UK, US, Canada, Germany, France, Italy and Japan. This coalition was set up in 1973 and held its first Summit two years later.

G7 Summits now act as an annual event where representatives from each of these economies can discuss the world’s most serious societal, economic and environmental challenges. This year’s meeting is taking place in Berlin, as Germany took over the presidency from the UK in January.

The leaders of all G7 nations are invited to Berlin. All seven are expected to be in attendance in person. A selection of non-member representatives is also invited each year, from other nations and organisations like the UN. Berlin’s summit will be the second to be held in person after Covid-19, with Carbis Bay in Cornwall having served as the location for 2021’s summit.

While this annual summit cannot officially pass any laws, it can create agreements around tackling key megatrends. In 2002, for example, the G7 helped create a global fund to tackle an array of diseases, including Malaria.

Will climate action be discussed?

Yes. German Chancellor Olaf Scholz has stated that Russia’s war in Ukraine should not serve as a distraction from action on other global challenges such as the continuing pandemic or the climate and nature crises, and urged attendees to recognise the need for joined-up solutions.

Germany has chosen “progress towards an equitable world” as the motto for the Summit and has listed making alliances for a “sustainable planet” as one of its key action areas. It is emphasising the need for economic transformation for the delivery of key social and environmental goals, which will be necessary for long-term economic stability.  G7 nations could lose 8.5% of their economies each year by 2050 as a result of the climate crisis, it has previously been estimated.

The clean energy transition is likely to be the environment-related issue that takes precedence at this year’s Summit. Russia’s invasion of Ukraine has prompted virtually every country that imports oil and gas to take a fresh look at energy security, as sanctions imposed on Russia are causing many nations to seek alternative options for Russian oil and gas imports. This could, in theory, lead to some places ramping up their own fossil fuel extraction or sourcing from other exporters, while keeping generation capacity online for longer or even building new plants.

But, with 90% of GDP now covered by net-zero commitments, discussions around how accelerating the transition to clean energy can enhance energy security and contribute to peacekeeping efforts are ramping up. This is particularly pertinent given that global gas prices are high, meaning that policymakers are facing pressure to respond across the energy ‘trilemma’ of affordability, security and environmental impact. The UK and the EU have already updated policy packages in an attempt to do so. The question is not whether something should be done on the energy trilemma, but about which mix of solutions is the most politically acceptable to the leading party in each G7 economy – and about how important the environmental point is compared with the other two ‘prongs’.

Another important focus area will likely be the intersection between nature and food and farming. Food security is under threat globally due to Russia’s war in Ukraine, given that the two nations are major exporters of wheat and sunflower products. The UN is estimating that this disruption, compounded by India’s wheat export ban, will cause up to 131 million additional people to suffer from undernourishment over the next three years. At the same time, developments around the UN’s 15^th COP on biodiversity are increasing the focus among wealthy nations on nature conservation and restoration and how this must tie into the creation of better food systems.

Climate finance, loss and damage should also be discussed. Pre-COP27 meetings in Bonn earlier this month ended without a deal, with developing nations accusing wealthy nations including the US and EU’s member states of failing to acknowledge their historic contributions to emissions and how this will impact millions of people in the regions now most affected by rising temperatures.

Ban-Ki-Moon has penned an open letter to G7 leaders ahead of the Summit, published in The Independent, calling on them to accelerate efforts to deliver $100bn in annual climate financing for low-income countries. This pledge was first made in 2009 but has never been met. It was stated last year that the full amount is likely to be provided in 2023. Some nations want additional money to make up for past underpayments.

Moon wrote: “They can go further by ensuring these funds come in the form of grants instead of loans, and update funding targets in response to the increasing loss and damages caused by extreme weather events, rising sea levels, and proliferating heat waves.”

Also weighing in ahead of the summit is Laurence Tubiana, Paris Agreement architect and now chief executive at the European Climate Foundation. She said: “G7 is a key moment for Germany: a chance to foster global solidarity and address the food, debt and climate crises. This triple crisis has the same roots: our dependency on fossil fuels. As demanded by the UN Secretary-General, we have to stop this suicidal war against nature, which means for countries to plan a full phase-out by investing more in renewable energy and to reform our broken and unequal food system.”

What do green groups want from the Summit?

Organisations and individuals from across the global green economy are calling on leaders to make strong, meaningful and interconnected commitments that will have benefits for people and planet. Moon noted that “rising to the challenges” of creating peace, ending the pandemic and securing economic stability “means addressing a threat that both dwarfs and implicates all the others: climate change”.

As noted above, accelerating the clean energy transition and energy efficiency efforts to improve security is a key focus. UN Secretary-General Antonio Guterres has stated: “The first duty of leadership is to protect people from clear and present dangers… we seem trapped in a world where fossil fuel producers and financiers have humanity by the throat.”

G7 leaders already agreed, in May, to ensure that their electricity systems are “predominantly” zero-carbon by 2035. Some groups are pushing for a formal exit date for coal-fired electricity to support this. Japan is understood to be the main opponent to such a move. Other nations are also reportedly pushing back on a complete end to unabated gas. Moreover, at present, the G7 has not agreed to any broad new commitments on decarbonising heat or improving energy efficiency.

Research released by the We Mean Business Coalition and Cambridge Econometrics this week, intended to influence G7 decisions, states that policy decisions to end fossil fuel dependency would reduce the average G7 resident’s combined home energy bills by $825 by 2035. This would be a 45% saving. Bringing about these savings will require ending domestic coal-fired power generation in the G7 by 2030; achieving 70% renewables in the G7 power generation mix by 2035 and bringing power systems to net-zero by 2035. The scenario modelled includes an end to all fossil fuel subsidies by 2035, with funding redirected to energy efficiency and renewables. Petrol and diesel cars and vans would be banned by 2035.

The research emphasises that making these policy changes is also an opportunity for job creation and ‘levelling up’. It forecasts that an additional 1.92 million jobs could be created across the G7, by 2025, in the scenario used.  900,000 would be in the US. Across the G7, public spending costs would also be reduced in areas like government bailouts of energy companies and healthcare costs resulting from fuel poverty. We Mean Business is calling its policy asks “realistic” and the benefits “significant”.

Of course, some other groups are arguing that the G7 should bet on nuclear as well as renewables, including the Nuclear Industry Association in the UK and its counterparts in Canada, the EU and Japan. These groups want to see a commitment to improving financing frameworks for nuclear, increasing in nuclear capacity targets for future energy mix plans and providing new funding for small and advanced reactors.

The Energy and Climate Intelligence Unit (ECIU) is noting that G7 nations also have a role to play in improving energy access globally and accelerating the low-carbon energy transition beyond their borders. Similarly, E3G is noting that G7 nations must ensure that the transition – domestically and globally – is socially just. G7 nations have been floating the idea of creating Just Energy Transition Partnerships, but are being called on to ensure they are properly resourced and prioritised. This will be necessary to “move the trillions” from the private sector.

Partnerships like the #JustTransition deal between G7 countries and South Africa are examples of what such clean energy finance can look like. This deal can be a blueprint for other finance plans, but only if the promised $8.5bn materialises.

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— The Elders (@TheElders) June 24, 2022

Energy transition aside, carbon pricing could also be on the agenda. G7 nations have never included an agreement on carbon price floors or ceilings in a Summit communique before, but have agreed to dedicate time in the agenda to the issue for 2022. The $10.6trn Net-Zero Asset Owner Alliance this month recommended that the G7 should agree, as a priority, to create carbon pricing frameworks that would be conducive to the transition to net-zero in line with the Paris Agreement’s 1.5C temperature pathway. The We Mean Business Coalition is, similarly, calling for all G7 nations to “put a meaningful price on carbon” by the end of 2022.

The German G7 presidency is keen to establish a ‘cooperative climate club’ through which nations can co-create and implement new changes such as carbon price corridors. Think-tank E3G has stated that for this initiative to “have any credibility and staying power”, the G7 will need to outline a process that tackles the biggest and hardest-to-abate sectors in terms of emissions, and which ensures knowledge and resources are not gatekept from developing nations.

As noted above, green groups are highlighting the need for G7 leaders to develop sustainable solutions to food security challenges, which the ECIU has described as a “real and present danger”. Nations may agree, as the US has asked them to, on new measures to solve the fertiliser challenge. Russia and Ukraine are major exporters, but some key buyers, including the EU, waste much of the fertiliser they import. Improving efficiencies could help ensure security of supply, and the US is also urging nations to funnel funding into alternative materials and to lower-input farming approaches. The UK and Germany are reportedly pushing for new agreements to prevent biofuel production from competing with land use for growing key crops.

Loss, damage and climate finance tie in with all of the above topics. After a no-deal in Bonn, G7 leaders may feel pressure to make strong progress in Berlin, or may kick the metaphorical can down the road until COP27. G7 Development Ministers spoke about a Global Shield Against Climate Risk, and Climate and Energy Ministers recognised the role of G7 countries in scaling up public and private finance for loss and damage at Bonn. With fewer actors at the table for this next meeting, progress may be made. But it remains to be seen whether the focus will shift from mere insurance and small loans to grants at scale.

Image: Rise Up Movement Mali demonstrates ahead of the G7 Summit

What will happen after the Summit?

Once the summit ends, the host nation – in this case, Germany – will publish an official “communique” document, outlining what has been agreed by world leaders. The German Government is also expected to hold a news conference on the final day (Tuesday 28 June).

Last year, the UK was acting as host of both the G7 presidency and the COP26 presidency, meaning that it used the communique to encourage other nations to submit updated Paris Agreement commitments.

This year, the COP build-up work will largely fall with Egypt, which will take the COP presidency over from the UK on the first day of that conference in Sharm el-Sheikh (7 November).

As noted above, the communique itself is not legally binding. It will be up to G7 nations to implement their own changes to laws and regulation, and to find the necessary finance, to deliver any new commitments. For example, G7 leaders agreed last year to mandate climate risk reporting from large companies within this decade. New mandates have now been implemented by the UK and the EU, with the US on the verge of implementing new sustainability risk and emissions reporting standards.