Paris aligned financial flows, inclusivity and evolving security, efficiency and circularity in the energy sector
June 8th, 2021
In the third meeting of the Energy Transition Working Group (ETWG) and of the Climate Sustainability Working Group (CSWG) the membership discussed the need to ensure the alignment of global financial flows towards a green, sustainable recovery as the key to combine prosperity and environmental sustainability while eradicating energy poverty, adopting an evolving concept of energy security and collaboration, and boosting the role of energy efficiency and circularity in the post-pandemic economy.
Aware that the post-pandemic reconstruction offers an unprecedented opportunity to accelerate the shift of global financial flows towards energy transition, climate neutrality and enhanced resilience to climate change, G20 members reflected on the need to seize such an opportunity.
Particular consideration was given to the economic potential of growing green sectors in an inclusive manner, building upon the recent evidence showing that limited space has been given to investments in labour market transformation in the design of recovery packages. Re-tooling the workforce for new sectors, technologies and markets, for example investing in skills training or in the provision of educational opportunities, is pivotal to enable the economy and society-wide structural changes to embark the transition pathways.
The shared belief on the need for a just transition underpinned also the focus on the necessity to ensure access to affordable, reliable, sustainable and modern energy for all. This is why, the acceleration in the transition was also discussed as an opportunity to be seized to eradicate energy poverty, a missing milestone to ensure prosperity to all peoples.
To advance towards this goal G20 members discussed several issues related to: a shared definition of energy poverty; a minimum set of standards to measure it; an integrated policy solution at all levels of government; a mechanism to ensure stability and continuity of action in this crucial endeavour.
In addition, seeing energy as an enabler of sustainable development requires that the global community focuses also on ensuring that the energy security evolves. The G20 members reflected on how the acceleration of the global clean energy transition calls for a new definition of energy security, as the risks to energy supplies are broadening.
Emerging risk factors at the global level include changing climate patterns and extreme weather events, the supply of critical minerals underpinning the transition to clean energy technologies, flexibility and adequacy as well as greater investments in power grids, as electrification, led by renewables, grows. While digitalization, an opportunity to enhance energy security through improved energy planning, real-time monitoring and distributed energy resources, is also expanding the risk profile of energy systems (i.e. digital security).
Guiding the clean energy transition while promoting energy security, affordability and boosting sustainable economic growth remains a critical task for G20 governments.
For these reasons the membership discussed a new concept of energy security aimed at building resilience and encompassing, inter alia, energy efficiency, a solid renewables’ deployment, demand-side measures, critical minerals supply-chain etc.., with a view to update and complement the 2014 G20 Brisbane principles on energy collaboration.
Succeeding in providing energy security, eradicating energy poverty and promoting sustainable development can surely happen in line with the trajectory to meet the Paris Agreement goals. Tackling climate change will be many times cheaper than the disruption that global heating will cause. However, the transition – more and more urgent – will not be easy and it will require important economic and social restructuring. A first driving force is decoupling the economic growth from emissions and accelerating the transition towards a more sustainable, climate neutral, and circular economy, with energy efficiency as a pivotal element, alongside promoting net-zero, circular models in all production sectors.
In particular, these can be addressed enhancing our efforts in energy efficiency and overcoming our linear model of energy production and consumption moving towards a new model of energy circularity.
In the next week, the membership will continue to reflect on those crucial issues during special events organised by the Italian Presidency.