Climate Transparency G20 Report 2016 – Brown to Green

Greenhouse gas emissions are not declining

The effects of climate change, which we are already witnessing, are the consequence of rising concentrations of greenhouse gases (GHGs). At the moment, absolute emissions are still rising, caused by our overwhelmingly fossil fuel-based energy system (our “brown infrastructure”).

From 1990 to 2013, G20 energy-related CO₂ emissions – the most important GHG –  increased by 56%. According to preliminary data from the International Energy Agency, global energy-related CO₂ emissions, for the first time, stalled in 2014 and 2015. If global temperature increase is to be kept “well below 2°C, pursuing efforts to keep it below 1.5°C”, as the Paris Agreement mandates, then absolute G20 emissions must be drastically reduced in the near future.

A slightly more positive result is the trajectory of per capita emissions. The G20 average of energy-related per capita emissions in 2013 was 5.7tCO₂e/y, only marginally up from the year before, and growing at a slower pace than the overall emissions. Yet estimates show that energy-related emissions would have to reach roughly 1 to 3 tCO₂e/y per person in 2050, if the global temperature increase is to be kept below 2°C.

Promising decarbonisation developments in some areas, but action not yet in line with longer term goals

In general, G20 countries are using energy resources more efficiently than in the past. The energy intensity and the carbon intensity of the G20 economies are both decreasing. However, this positive trend is not enough to compensate for the increase in economic activity, which has led to an overall increase in G20 CO2 and GHG emissions.

Plans for new coal fired power plants remain an important obstacle to decarbonisation

The carbon intensity of the energy sector, however, is slightly increasing, a consequence of the still strong – and in some cases even growing – role of coal. Most of the G20 countries rely heavily on coal in their primary energy supply: developing countries like South Africa (69%), China (68%) and India (45%), but also industrialised countries like Australia (37%), Germany (26%), and Japan (25%). G20 countries are planning a large number of new coal fired power plants that, if realised, would almost double coal capacity, making it virtually impossible to keep the temperature increase to below 2°C, let alone 1.5˚C.

Renewable energy is a success story worldwide

This development contrasts with the success story of renewable energy. For the G20, the use of renewable energy has increased by 18% since 2008. Countries with a high share of renewable energy production are Brazil, Canada, Italy, India, South Africa, Turkey – and the EU. The only G20 country where renewable energy declined from 2008 to 2013 was Mexico, a trend that is expected to change if Mexico adopts new policies under consideration.

National climate policy frameworks are developing fast 

Much progress has been made with greening G20 country policy frameworks, at least on paper. All governments submitted Intended Nationally Determined Contributions (INDCs) under the Paris Agreement. Nearly all have introduced energy conservation policies in the building sector, and have emissions standards for cars. All have support schemes for renewable energy, and more than half have either an Emissions Trading Scheme or a Carbon Tax in place. Only half have developed long-term decarbonisation plans[1] and eleven of the G20 countries have a 2050 greenhouse gas emissions target.

Experts give the policy framework and their implementation mixed reviews. On an international policy level, France gets high marks for its work on the Paris Agreement, as does Germany for putting decarbonisation on the G7 agenda. China and India are ranked high for their domestic policy work, while Turkey, Japan and Italy are rated as the “brownest” countries on their national policy performance.

Carbon pricing schemes – emissions trading schemes (ETS) and carbon taxes – are expanding within the G20, with a whole range of different schemes being applied. The EU Emissions Trading System remains the single largest carbon-pricing instrument; China is expanding its ETS’s, as are parts of the USA and Canada. India operates a carbon tax on coal. Several other countries have either an ETS or a carbon tax – or both. However, globally, existing carbon price levels vary significantly and are generally too low to achieve a significant drive to moving economies from brown to green.

Despite all these efforts to keep warming below the 2°C limit, the INDCs of the G20 countries are still far from being sufficient:  indeed the G20, together, needs to reduce emissions in 2030 by a further 85% – six times the efforts they have pledged so far.

Fossil fuel subsidies are still widespread

All G20 countries subsidise their fossil fuel industry – brown subsidies that support the use of carbon-intensive energy – despite the fact that, in 2009, G20 country leaders pledged to phase out fossil fuel subsidies. For the developed countries in the G20, these subsidies are substantially higher than their contribution to international climate finance.

Investments start shifting from brown to green, but still a long way to go

To be in line with a 2°C trajectory, average annual G20 country investment in the power sector will have to roughly double by 2035 from the level it is been over the period 2000-2013. Conditions for green investments vary in G20 countries.

Investment attractiveness in renewable energy is rated relatively high in China, France, Germany, India, the UK and the United States. China’s high rating comes from the coherence and reliability of its green policy environment, India’s from its ambitious renewable energy targets and the United States’ from its overall size of the economy and commercial and regional importance. While Germany and France are also rated high, Germany’s investment attractiveness has dropped due to its upcoming renewable energy cap, and France due to its reliance on nuclear energy slowing the uptake of renewables. Similarly, in the UK, the latest national referendum on the EU membership might affect its currently high rated investment attractiveness.

At the other end of the scale are Russia, Saudi Arabia and Turkey. Russia has little support for renewables, as with Saudi Arabia, where the power system has an almost negligible capacity for absorbing them. Turkey has turned to coal, putting up barriers to renewable investments which, up to 2014, were comparatively high.

International climate finance is increasing, but below expectations

The eight G20 countries obliged to provide climate finance include some of the world’s largest climate finance donors. Taking into account international climate finance provided through bilateral and multilateral channels, France, Germany, Japan, the UK and the United States each provided between USD 1.2 billion and USD 8.4 billion a year in 2013 and 2014. These contributions are modest in comparison to GDP. Ratios are highest in the case of Japan (0.18%) and France (0.12%) and lowest in the case of Canada (0.0008%), Australia (0.001%) and Italy (0.0003%).