Last week, United States President Joe Biden hosted the Leaders Summit on Climate. The President invited 40 leaders from around the world, including 17 countries from the US-led ‘Major Economies Forum on Energy and Climate’ – responsible for close to 80 per cent of global emissions and gross domestic product.
Other invitees included leaders from nations demonstrating strong climate leadership, those especially vulnerable to climate impacts, or those charting innovative pathways to a net-zero economy.
Prior to the summit, the US indicated it expected leaders to announce emissions targets, building momentum for change ahead of COP26 in Glasgow later this year. China and the US delivered a co-statement on April 17 that committed both countries to developing their respective long-term strategies (aimed at net zero greenhouse gas emissions/carbon neutrality) in time for COP26. The two nations also outlined that they would cooperate to ‘significantly advance global climate ambition on mitigation, adaptation, and support’: a statement that bodes well for global climate diplomacy.
The US had been hinting at increasing their target for emissions reduction. President Obama had set a target of 26-28 per cent reduction on 2005 levels, by 2025. This was updated at the Summit with a new commitment of 50-52 per cent by 2030. President Xi reiterated China’s existing net zero by 2060 target, and announced the nation will limit increases in coal consumption between 2021-2025, phasing it out from 2026 to 2030. This is a significant milestone, but the commitment does not include an absolute limit on coal growth, a date for complete phase-out, or an end to the financing of fossil fuel infrastructure abroad.
The UK had already announced an updated 2030 target at the end of last year, but added to this at the Summit a 2035 reduction target – 78 per cent below 1990 levels. Japan’s Prime Minister, Yoshihide Suga, announced a new 2030 target of 46 per cent. Canada’s Prime Minister Justin Trudeau announced a similar target of 40-45 per cent, while also announcing that their carbon price will rise to CA$170 (per tonne of carbon dioxide) by 2030. South Korea committed to raising its Nationally Determined Contribution, and to stop financing international coal plants. President of the European Union, Ursula von der Leyen, said her focus is making Europe ‘fit for 55’ (55 per cent by 2030): ‘we will make carbon pricing work not just for electricity but for transport and buildings… because nature can no longer afford to pay the price’.
How to avoid emissions and other environmental degradation from deforestation was also discussed at the Summit – this forms a key part of some countries emissions, such as Brazil. Calls for greater controls of deforestation and financial support for these measures continues to be a contentious topic. It remains to be seen how countries view the newly launched Lowering Emissions by Accelerating Forest finance (LEAF) Coalition. Major corporate and country partners have committed to raise US$1 billion this year.
What does this mean for Indonesia?
Indonesia – already considering setting a net-zero emissions target by 2070 – used the Summit to express its commitment to climate change action and lowering rates of deforestation. President Joko Widodo stated that developing countries could consider net zero emissions targets, drawing upon international finance and capacity support. The President also emphasised that Indonesia will participate in the green race for low-carbon technologies with opportunities in biofuels, lithium battery industries and EVs. Indonesia will use its presidency of the G20, starting in 2022, to encourage climate change cooperation.
There were several meetings between the US and Indonesia in the lead up to the summit. The Indonesian Minister for Maritime Affairs and Investment, Luhut Binsar Pandjaitan, had meetings with the United States Special Presidential Envoy for Climate, John Kerry. The senior officials also had subsequent calls, informed on Indonesia’s end by expert input on how the nation can position itself as a leader in the ‘green race’, specifically regarding biofuels, batteries and electric vehicles (which Climateworks contributed to). Bilateral engagement such as this encounter, focusing on trade opportunities ahead of the summit, has been key to informing Indonesia’s current stance.
Around the same time, the Indonesian Ministry of Planning and PLN – Indonesia’s state owned electricity provider – publicly shared scenarios for net zero emissions by 2050 in the electricity sector. This suggests Indonesia, specifically the energy sector, is weighing the possibility of raising ambition, although this is likely dependent on receiving adequate financial support from developed nations.
What does this mean for Australia?
At the Summit, Prime Minister Scott Morrison resisted international pressure to make new commitments and maintained his ‘technology not taxes’ stance. Shortly before, he had announced three additional funds to support new technologies: around AU$275 million for ‘clean’ hydrogen, a similar amount for carbon capture and storage and around AU$500 million for international partnerships on ‘low-emissions technology’. Further details on this funding are expected as part of the forthcoming budget.
Commentators noted that support for new technologies is an important part of efforts to reduce emissions. However this cannot be the only approach, rather instead should be part of a larger whole. A comprehensive package including new policies and targets to provide clarity to businesses and investors and drive ambition.
The pressure for further commitments from Australia is expected to continue. The next key point is likely to be the G7 leaders summit in June – where Australia is one of three guest countries – with further pressure points likely before the UN climate summit in November this year.
What do the announcements mean for the 2030 emissions gap?
Bill Hare of Climate Analytics stated that the Summit ‘has led to the single biggest reduction in the 2030 emissions gap – at 12-14 per cent – that we’ve ever seen’. The Climate Action Tracker, which measures government targets against the Paris Agreement, compared the Summit’s announcements against those made in September 2020. In this early assessment they found that the emissions gap has narrowed from 23-27 GtCO2e (gigatonnes of equivalent carbon dioxide) in September 2020, to 20-24 GtCO2e in April 2021.
US returns to financing the green transition
The US is substantially increasing their financial contributions, announcing that they will be contributing US$5.7 billion annually, by 2024 – double that previously pledged during the Obama administration. Part of these funds will go to the United Nations ‘Green Climate Fund’, a welcome move after former President Donald Trump ceased contributions (Australia has also stopped contributing to the fund). This pledge will be very welcome, but even with this major contribution there remains a funding gap. Developing countries agreed to a collective goal of mobilising US$100 billion annually from public and private sources as part of the Paris Agreement. According to analysis by the OECD in 2018 (latest figures available), US$78.9 billion of this goal has been mobilised .
Although still falling short of what is needed to keep climate change under 1.5 degrees, the Summit provided plenty of wins. These included major advances in the ambition of targets, and gains through climate finance being ‘scaled up’. Over the year to come Climateworks will be showing how this increased ambition can be turned into action, focusing on the most important areas to create change in different sectors of the economy. Find out how Climateworks is changing our approach, to ensure we can meet the need for increased action in our region – Australia, Southeast Asia and the Pacific.