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The G7's Prospects on Clean Energy and Energy Efficiency

Hanh Nguyen, G7 Research Group
May 27, 2017

G7/8 and Global Energy Investment

Clean energy and energy efficiency play a critical role in ensuring economic development, energy security and environmental sustainability. The implementation of efficient energy policies contributes to mitigating climate change, which is a globally central concern. The energy sector, however, is capital-intensive rather than labour-intensive. This makes it difficult for developing countries to afford investments needed for clean energy and energy efficiency.

The G7/8 has long been led in promoting global clean energy and energy efficiency. Indeed, before the G8 summits in Gleneagles and St. Petersburg, there was almost no high-level forum global energy forum, despite the multidimensionality and urgency of energy efficiency in the context of climate change. The G7/8 has shown its ambition by taking a seat "in the world's empty cockpit at a time of increasing inter-vulnerability and deepening multi-polarity," even though it has "a patchy record."

Indeed, the G7/8's role in clean energy and energy efficiency is very critical and visible, with several energy-related initiatives invented by the group. Global governance for bioenergy has changed rapidly with the emergence of the G8 and Global Bioenergy Partnership (GBEP), the first multistakeholder network for bioenergy. Throughout the evolution of GBEP, the G7/8 has introduced, welcomed, supported, applauded and recognized the importance of its new initiative. It is the way to grafting a young policy entrepreneur into the landscape of international governance while declaring the G8's commitment to global energy.

Clean Energy and Energy Efficiency at Past Summits

Energy has on the G7/8 agenda since 2001, when G8 energy ministers met for the first time. However, it was not until 2006 that the G8 emphasized global energy challenges and issued the St. Petersburg Plan of Action on Global Energy Security. The action plan underlined the importance of encouraging public and private investments in clean energy and energy efficiency. Since then, the topic has been addressed at the G8 summits in 2007, 2008, 2009, 2012, 2014, 2015 and 2016. In addition, energy intersects with other core issues on the summit agenda, including climate change, nonproliferation and regional security.

According to the analysis by the G7 Research Group, the topic of energy has a relatively high average compliance score (82%). Energy compliance is led by the United States (98%) and the European Union (83%). Russia and Italy, in contrast, have been the main drag on compliance with energy commitments at 66% and 74% respectively. This fact suggests that with Russia suspended from the G8, the remaining seven members will have higher compliance with energy-friendly policies in the future.

Energy Strategies by Three Newcomers of G7

The G7's 2017 Taormina Summit marks an important but challenging event with new representatives from three big players: the United States, the United Kingdom and France. But there are already divisions between these three presidents on energy strategies.

The United States

Even during his election campaign, President Donald Trump promised to withdraw the United States from the Paris Agreement and from any effort to finance climate change control. Recently, Trump's directions for the Clean Power Plan and climate change agenda are considered to contain many risks and uncertainties, which could hold back global efforts to mitigate climate change. Given that the United States is by far the main financial contributor of global climate change funds such as the Green Climate Fund, any movement by Trump will have significant impacts on the global landscape for energy efficiency and climate change.

The United Kingdom

British prime minister Theresa May has faced criticism for her energy control policy. She advocates for government intervention in the energy market to lower the energy price for the sake of energy equity. However, this policy may discourage private investments in the so-called "unattractive" market, which in turn put more strain on public budget for subsidizing energy.

France

Newly elected French president Emmanuel Macron has promised to continue France's gradual shift to a green economy through a mix of targets for renewables, efficiency, a price on carbon emissions and the phase-out of coal plants. On arrival in Sicily for the Taormina Summit, he detailed his priorities for the summit, which included climate change and trade. This gave a positive signal for the G7's energy policies.

A way forward

The G7 Taormina Summit this year promises to be an important but difficult summit for all seven leaders. In addition to the matter of security and migration, clean energy and energy efficiency are crucial policy areas that are challenging to address and reach consensus on.

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