President Joe Biden's supercharged ambitions on climate change are about to hit a deflating reality at this week's G-7 summit: tensions between the U.S. and its allies and the developing world about how to live up to their promises.
Biden came into office promoting climate action as one of his major priorities, while proposing trillions of dollars in spending on the issue, rejoining the Paris agreement and hosting his own global climate summit in April. But the United States and other G-7 nations are falling short of their past pledges for international climate aid, and the Biden administration has cautioned European leaders against a controversial plan for carbon tariffs that could burden U.S. manufacturers.
Doubts are also emerging over whether Japan will get fully on board with a G-7-wide proposal to ban overseas financing of coal plants, w unanimity is seen as a key check against China.
Those are among the challenges facing Biden during the three-day summit that starts Friday in Cornwall, England. The summit comes just weeks after he unveiled a $6 trillion budget proposal that framed U.S. investment in clean energy as a competition with China over new jobs and markets.
Here’s what to watch for as the president tries to find common ground with leaders of the United Kingdom, Canada, Japan, Germany, France, Italy and the broader European Union:Show me the money
Developing nations want G-7 countries to more clearly and specifically outline how they intend to honor commitments to deliver $100 billion of climate aid. But the developing countries are likely to be disappointed, people following the issue say.
“I don’t anticipate major moves [at the summit],” said Brian O’Hanlon of think tank RMI, who was managing director of business development for the energy portfolio of the Overseas Private Investment Corp. That organization was the predecessor to the U.S. International Development Finance Corp., which puts U.S. government financing behind overseas projects.
A communique from G-7 climate and energy ministers last month and another from finance ministers last week moved to “reaffirm” the $100 billion finance goal by 2025 “from a wide variety of sources.” But little new information is expected this weekend on how nations will close the roughly $20 billion shortfall in reaching the figure, especially given the final communique will likely truncate the ministerial-level statement.
The tepidness from finance ministers was palpable in their communique, which called on G-7 nations and multilateral development banks to do more. Even more oddly, those ministers are in charge of crafting their countries' aid packages and control a majority of the shares of multilateral development banks those officials called on to up the ante, noted Rachel Kyte, dean of Tufts University’s Fletcher School and a former senior World Bank official.
“It was almost as if the finance ministers were talking to somebody else about what needs to happen — yet it is them,” Kyte said, adding, “The question that I really think is for the leader summit is: ‘If not the G-7, then who? If not now, then when?’”
UK Prime Minister Boris Johnson is shopping a nebulously defined "Marshall Plan" encouraging G-7 nations to spend billions on renewable energy, technical assistance and other climate-facing projects in developing nations, an idea his government has shared with the Biden administration, said Alden Meyer, senior associate with think tank E3G. But the concept lacks details and runs the risk of being dismissed as more "rhetoric."
"It’s good that the G-7 leaders want to talk about it, but to be worth the paper it’s written on they have to muscle up," he said.
Beyond that, Biden’s own recent budget proposal fell short of former President Barack Obama's commitment for U.S. contributions to the Green Climate Fund, a key program providing financial aid to poorer nations that need to adapt to the effects of climate change. Biden proposed $1.2 billion for the climate fund in his fiscal year 2022 budget, compared with the $2 billion remaining from Obama's pledge. The U.S. did not make contributions to the fund under former President Donald Trump.
“We have a chance to make pressure on the Biden administration because in a few things they have shown the right approach but not necessarily in the level of magnitude that they could,” former South African first lady and Mozambican politician Graça Machel, who is deputy chair of The Elders, a group of independent global leaders, said at a Monday media event. South Africa is participating in the G-7 as a guest, along with South Korea, Australia and India.
A State Department official told reporters in a call explaining Biden's budget proposal that the administration is using other programs and authorities, such as development finance, to fund climate projects in developing countries.
“We're asking Congress to take a really big leap , funding a lot of things that they either haven't funded in four or five years or have never funded before in numbers that start with a billion,” the official said.
It’s not just the U.S. falling short, said E3G's Meyer. He noted German Chancellor Angela Merkel’s government also balked at enhancing aid, with upcoming elections likely shutting its coffers, though he was hopeful that Germany, Canada and Italy would announce new aid. Italy and France, too, often offer aid with “an awful lot of strings attached,” Kyte said.Slaying King Coal
G-7 environment ministers believed they had struck an agreement to end international overseas coal finance last month. But soon after, Japanese officials made comments that sowed confusion over whether they were on the same page.
W Prime Minister Yoshihide Suga’s government lands on financing overseas coal projects will tfore be one of the more closely watched climate-facing items in Cornwall. Environmental groups both inside and outside Japan worry that Suga’s government will continue financing coal-fired power plants being built in Indonesia and Bangladesh.
The Biden administration will exert pressure on Japan, as the U.S. was a lead driver of the overseas finance ban in last month's ministerial-level statement, according to people familiar with the process.
T must be "no exemptions" or "wishy-washiness" on the extent of the ban, said Han Chen, manager of the international energy policy program at the Natural Resources Defense Council. "Some [Japanese] ministries are interpreting it as saying that you can have plants with lower emissions."
Whether Germany can commit to an earlier domestic coal phaseout will also be telling, said Steve Herz, a senior attorney and international climate adviser with the Sierra Club. Germany in recent years expended much political capital on a laborious effort among civil society groups, unions, power companies and local governments to broker a coal exit by 2038. But the European Commission’s strengthened climate targets and the German constitutional court’s April ruling that the nation’s climate goals insufficiently protect future generations will likely bring that coal deadline forward, he said.Trade winds
Tariffs on the carbon intensity of imported goods will likely surface at the summit even though it isn’t on the official agenda, especially after draft language for the EU’s carbon border adjustment mechanism leaked last week.
Carbon tariffs are an emerging international front in the climate space given the EU’s moves to put its manufacturers on a more even playing field with foreign competitors who want to ship goods t but don't have emissions reduction rules in their home countries — and don’t have to pay for increasingly expensive credits in the EU’s carbon market.
Biden, too, has addressed the issue, calling for a carbon border tax during last year's campaign. But his special presidential climate envoy, John Kerry, has cautioned the EU against the approach, which the U.S. would be hard-pressed to match given the long odds of getting Congress to pass a carbon price that would align with the European system.
“It’s a tricky point between the United States and Europe,” said Samantha Gross, director of the energy security and climate initiative at the Brookings Institution.
Japan’s Ministry of Economy, Trade and Industry has begun exploring what a carbon tariff would mean for its manufacturers, said Jane Nakano, senior fellow in the energy security and climate change program at the Center for Strategic and International Studies.
Kerry, too, has said the U.S. is looking at the implications of a carbon tariff. A draft EU statement for a summit next week with the U.S. that was obtained by POLITICO noted a shared desire to "address the risk of carbon leakage," when heavy-emitting industries relocate to areas with more permissive climate regulations.
While t is better understanding between both the EU and the U.S. of their differing political realities for carbon tariffs since the early days of the Biden administration, it’s still one with few easy solutions, Nakano said.
“My read is the Biden team isn’t necessarily rushing to start that set of issues — the whole climate-related trade issues. That’s another heavy lift,” she said.China
The G-7 also presents a chance for nations to align messaging on climate before turning to the G-20 finance ministers meeting next month, w China’s role in issues including overseas coal finance, its continued domestic buildout of coal and allegations of forced labor in the solar panel supply chain will loom large.
“China is not terribly susceptible to pressure from ... developed countries, but it does care what the developing world thinks,” Peter Betts, a former lead climate negotiator for the UK and EU who is now an associate fellow at the Chatham House, said in a media call. “And it's quite hard to ask the developing world to put pressure on China.”
The G-7 nations already are drawing the battle lines on coal finance, Herz said. Recent announcements from South Korea and Japan — if it lives up to the spirit of the ministerial communique — would isolate China as the public lender of last resort for coal, bringing reputational risk to China’s ability to claim climate leadership.
“A whole constellation of issues around an assertive China will obviously be on the agenda,” Herz said. “But on the issue of climate, [the G-7 nations] are going to use the opportunity to push [China].”
Jacopo Barigazzi contributed to this report.