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Notes on Energy and Climate from The G-7 Summit - Yaren Öztürk

The G-7 Leaders' Summit on 26-28 June, considered one of the crucial platforms in the search for solutions and implementation of global economic and political problems and a strong coalition with a significant influence in the international arena, was held at Elmau Palace in Bavaria, Germany. The leaders of the G-7, consisting of the world's seven largest economies, including the USA, England, France, Canada, Italy, Japan, and Germany, discussed mainly the ongoing Russia-Ukraine war, food insecurity, energy insecurity, rising inflation, and climate crisis.

With the suggestion of German Chancellor Olaf Sholz, the G-7 countries came up with the idea that is complementary to the European Union's carbon limit tax decision. The idea consisted of accelerating the achievement of the countries' climate targets; it was proposed the establishment of a climate club consisting of certain countries. It plans to base the climate club on three pillars. Its first column is a platform where member countries can discuss the impact of the policies they have implemented to reduce carbon emissions and the effects of the climate crisis on their countries and economies. In the second column, a common industry transformation is aimed. This industry transformation is planned to be accomplished through the industrial decarbonization agenda, creating a hydrogen action pact and expanding markets for green industrial products that often seek to compete on price with their more polluting fossil competitors. The last pillar of the climate club emphasizes the importance of partnership and cooperation with countries such as South Africa and India under the name of "Just Energy Transition Partnerships" (JETPs). Climate club member countries are planning to receive financial and technological support to achieve their climate goals through these Just Energy Transition Partnerships (JETPs). Another essential point emphasized at the G-7 summit was the increasing urgency of reducing global greenhouse gas emissions by approximately 43 percent until 2030 and accelerating the decision-making phase as much as possible. While Europe's increased reliance on coal for further power generation and growing record coal use levels in countries such as India and China, no details were given about how it would be possible to reduce greenhouse gas emissions. On the other hand, climate activists reacted strongly to the goals of combating the climate crisis set at the summit. The main reasons for these reactions were the failure to prevent the use of fossil fuels, the fact that coal power plants were allowed to operate for longer than usual, and as a result of the energy crisis that became evident in Europe with the war between Ukraine and Russia. Also, coming demand from Japan, the decision to make half of all vehicles zero emissions by 2030 was abandoned, and a promise was given to increase vehicle sales. Activists expressed that they found the climate club announced by the G-7 leaders to coordinate the policies implemented to combat climate change and achieve climate goals by 2050 insufficient due to its inadequate content. Climate activists also included allegations that G-7 leaders were using the ongoing war in Ukraine as an excuse to step back in tackling the climate crisis.

Another important point from the summit was imposing a ceiling price on oil imported from Russia to curb the rising oil and natural gas prices. In this context, it was emphasized that the European Union would work with international partners to find ways to stop the increasing energy prices, including the feasibility of imposing a ceiling price on imports from Russia, which will be a temporary practice. It was also stated that reliance on civilian nuclear-related products imported from Russia would be reduced, including by helping countries that want to diversify and increase their supplies. Although the G-7 countries stated that they announced the ceiling price practice to prevent Russia from financing and profiting from the war in Ukraine, this practice also raises question marks. In theory, the price ceiling would severely impede Putin's ability to make money from oil exports and keep oil on the market. It would cut off a significant flow of finance for Russia's war in Ukraine while at the same time lowering rising inflation and energy prices. However, implementation will not be that simple. It will take a long time to organize the negotiations and reach a common agreement in the first place. Adequate participation from countries worldwide will be required for any measure to be aligned with existing sanctions. Cooperation with any government that transports, refines, or imports crude oil from Russia will require coalition formation, which will require great effort. If the possible establishment of a coalition, India, and China must be included, which are in a great trade flow with Russia. According to the International Energy Agency, Russia's revenues increased in May, although sanctions against Russia since the war began have reduced Russia's oil export volume. On the other hand, India and China significantly increased their oil purchases from Russia with the war began, creating an alternative source of income for Russia. This situation drags the price ceiling practice to a more debatable position.

The last essential point is that the G-7 leaders pledged $4.5 billion to tackle food insecurity and the risk of food shortages. Although this promise was made to increase the resilience of food systems worldwide and reduce the risk of famine, The United Nations World Food Programme says that the amount required for the target is approximately $22.2 billion. In conclusion, although at the G-7 summit there were many issues and ideas were discussed, the position reached is still insufficient. There should be detailed work on decisions. It only seems possible that decisions will reach their goals by realizing the importance of the criticisms made and combining them with feasibility studies.


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