Op-ed, published in Tagesspiegel Background, 22.06.2022
As G7 Leaders prepare to gather in Bavaria for their annual summit, the backdrop is an escalating energy crisis and a narrowing window of opportunity to limit global heating to 1.5°C. This, along with the disruption to the global energy system, exacerbated by the Russian invasion of Ukraine, underscores the need for a rapid shift to clean energy to strengthen energy security, and economic and geopolitical stability.
Recent signals from the G7 Ministerial meetings are encouraging for the 7500 businesses working to cut their emissions in line with the Paris Agreement: a commitment from climate and energy ministers to decarbonize G7 nations’ power sectors by 2035; support for transformation in heavy industry and a recognition of the need for circular economies.
We urge the G7 heads of state and government to build on these signals with clear timelines to help the private sector decarbonize our economies faster: like specifying that coal-fired power must end in the G7 by 2030.
The G7 ministers’ pledge to end international financing for fossil fuels this year is welcome. Business now needs detail on how nations will deliver their existing domestic commitments to stop subsidising fossil fuels at home by 2025 and redirect those funds towards energy efficiency, renewable energy, and other measures to support a people-centred and equitable clean energy transition.
Equally important for business will be for the G7 to strengthen energy efficiency and storage measures, often neglected by policymakers. For example, doubling the rate of energy efficiency improvements seen in the last decade would, by 2030, slash global energy use by the same amount used in China every year, saving households $650bn. Companies are looking to governments to scale up finance in these areas, de-risk private investments and set time-bound targets.
The G7’s commitment to ramp-up global markets and supply chains for renewable hydrogen, and its derivatives, is another key enabling step toward the full decarbonization of our industries. However, this can only work if accompanied by common standards and frameworks. Time is not on our side.
The “Climate Club”, proposed by the G7 Presidency, could be a promising addition if focused on strengthening intergovernmental collaboration on climate, industry and energy. It could increase international cooperation through harmonized standards and provide essential financial support for the clean energy transition in developing countries. But it must be accompanied by concrete measures.
As they continue negotiations, G7 leaders can take confidence from the thousands of major companies voluntarily working to cut their emissions, through actions like setting science-based targets, and switching to 100% renewable power.
They can also take confidence from the 1000+ businesses that have recently called for an accelerated transition to a clean energy system in advocacy letters to leaders of G7 member countries. The message from business is clear and echoes the unequivocal climate science.
Fossil fuels are too risky and volatile to be the reliable energy source we desperately need. Energy-related emissions account for 76% of global greenhouse gas emissions. Drilling for any new fossil fuel sources will result in a level of global temperature rise that threatens the future of humanity. Fortunately, we have the technology, innovation and demand required for a clean energy system if we act now.
Clean energy is better for business, economies and communities. It prevents countries and companies holding costly stranded fossil fuel assets. It negates the significant national security risks that climate change would bring if we don’t halve global emissions by 2030. It brings cleaner air and improved public health. The renewable energy industry could create 38 million jobs globally by 2030. Successfully pursuing net zero would create a market for wind turbines, solar panels, lithium-ion batteries and fuel cells of over USD 1 trillion a year by 2050.
To harness these opportunities, companies need ambitious policy support from G7 governments for a clean energy system. This will help them achieve their science-based emissions reduction targets because doing so requires access to renewable power right across their value chains. Therefore, we need to increase renewable energy targets to 70% renewable energy in electricity generation by 2030 while scaling up the production and availability of green hydrogen and building the necessary infrastructure to ensure renewable energy is reaching industrial facilities.
A rapid transition to a diversified, reliable clean energy system is the most cost-effective way to increase energy security, reduce energy price volatility, cut emissions and strengthen economic resilience. To be successful, the transition must be carefully managed and people centered to ensure that businesses and the people they serve and employ can thrive. As representatives of thousands of companies, we ask G7 leaders to shoulder their responsibility wisely and bring the courage and good sense to scale up clean energy right now. It will pay off now, in the current crisis, and for generations to come.
By Maria Mendiluce, CEO, We Mean Business Coalition and Sabine Nallinger, Stiftung KlimaWirtschaft – German CEO Alliance for Climate and Economy