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    G7 Yields Underwhelming Climate Results

    Stockholm (NordSIP) – On 28 June, the world’s most powerful leaders wrapped up the latest round of G7 talks in German Elmau. While restating their commitment to end the use of fossil fuels and highlighting the increased urgency to act, the leaders seemed far more preoccupied with the multiple challenges presented by the war in Ukraine, spiralling inflation, and energy and food shortages. Reconciling long-term moral imperatives with the more immediate political and macroeconomic concerns once again proved an impossible equation to solve. The results of their three-day intense discussions, summarised in a final communique, are, thus, set to intensify the concerns of environmental groups ahead of the upcoming COP27 climate summit.

    The communique describes investment in LNG (liquefied natural gas) as a necessary response to the current crisis. “In these exceptional circumstances, publicly supported investment in the gas sector can be appropriate as a temporary response,” state the leaders, despite noting “with concern that currently neither global ambition nor implementation is sufficient to achieve the goals of the Paris Agreement.”

    Even an earlier pledge to end funding thermal coal power generation abroad is being re-examined in the name of national security and geostrategic interests. Diluting the previously firm commitment, the leaders open up for exceptions, although “in limited circumstances clearly defined by each country consistent with a 1.5°C warming limit and the goals of the Paris Agreement.”

    Allegedly under pressure from Japan, the G7 leaders have also dropped a commitment to making half of all vehicles zero-emission by 2030, replacing it with a vaguer pledge to “significantly” increase sales.

    On a more positive note, the leaders tentatively agreed to establish an international Climate Club for nations that want to take more ambitious climate action and keep global warming to no more than 1.5°C. The move, championed by the summit’s host, the German Chancellor Olaf Scholz, would involve member countries harmonising their measures and avoiding climate-related tariffs on each other’s imports. The leaders extended an open invitation to big emerging economies such as China to join the new club.

    Among the more tangible positive outcomes from the summit is the intention to ramp up infrastructure investments. The long-term plan is to counter China’s Belt and Road Initiative and lay the foundations for green energy in Africa, Latin America, and Asia. “Through our Partnership for Global Infrastructure and Investment, we aim to mobilise USD 600 billion over the next five years to narrow the global investment gap,” stated the leaders. “We will step up our cooperation globally, including through working towards new Just Energy Transition Partnerships with Indonesia, India, Senegal and Vietnam, building on our existing partnership with South Africa.”

    Image courtesy of © Presse- und Informationsamt der Bundesregierung/Güngör
    Julia Axelsson, CAIA
    Julia Axelsson, CAIA
    Julia has accumulated experience in asset management for more than 20 years in Stockholm and Beijing, in portfolio management, asset allocation, fund selection and risk management. In December 2020, she completed a program in Sustainability Studies at the University of Linköping. Julia speaks Mandarin, Bulgarian, Hindi, Russian, Swedish, Urdu and English. She holds a Master in Indology from Sofia University and has completed studies in Economics at both Stockholm University and Stockholm School of Economics.

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