cover image: Enhancing the G20’s Climate Change Policy Agenda with the Circular Carbon Economy Index

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Enhancing the G20’s Climate Change Policy Agenda with the Circular Carbon Economy Index

29 May 2023

Task Force 4: Refuelling Growth: Clean Energy and Green Transition 1. The Challenge The Sixth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC) confirms that the gap between current global greenhouse gas (GHG) emissions and emissions level needed to limit global warming in line with the Paris Agreement remains significant, and the GHG levels resulting from the implementation of countries’ nationally determined contributions (NDCs) would “make it likely that warming will exceed 1.5°C during the 21st century and make it harder to limit warming below 2°C” (IPCC, 2023). In addition to the emissions gap, the IPCC report draws attention to the financing gap, noting that “finance flows fall short of the levels needed to meet climate goals across all sectors and regions” (IPCC, 2023). To meet the Paris Agreement’s temperature goals, not only will emissions need to fall faster, but support to developing countries will need to accelerate and scale up significantly. While there is consensus on this dual challenge, there is no a shared language and common framework for defining the necessary energy and economic transitions. Medium- and long-term targets have, in recent years, become a common way for developed and developing countries alike to signal to markets how fast they intend to mitigate emissions. As of April 2023, 194 countries had set NDCs and 130 had announced net-zero CO 2 or GHG targets (UNFCCC 2023; ECIU 2023). The G20 countries accounts for close to 80 percent of global GHG emissions. All G20 member countries have an emissions-based NDC target, and the G20 has collectively committed to “achieve global net zero greenhouse gas emissions/carbon neutrality by or around mid-century” (G20 Indonesia, 2022). Achieving net zero requires significant resources. Many developing countries have individually indicated either an estimate of the total cost to implement their NDCs, or the support needed towards this (UNFCCC, 2023). Estimates of the global investment needs range between US$4 trillion and US$8 trillion depending on scenarios and assumptions, e.g., IRENA (2021), BNEF (2021), IEA (2021), and McKinsey & Company (2022). Some attempts have been made to quantify the gap between the net-zero transition investment needs and actual investment flows. For example, a recent study finds that although all countries are lagging on the transition investment agenda, these gaps are strikingly wide in developing countries. It also shows that climate finance flows are limited in size and unequally distributed (Yilmaz et al., 2022).

Authors

Fatih Yilmaz, Fahad M. Alturki, Mari Luomi, Thamir Al Shehri

Published in
India

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