"Resilience" as a new model for G20 countries' policy to better serve sustainable energy markets

Economic resilience to better serve energy markets and tackle climate change

 

In the aftermaths of a financial and budgetary crisis, faced with a slow economic recovery and forced to respond quickly to geopolitical and natural resources challenges of global character, the representatives from governments and central banks of the Group of the Twenty major economies (so-called G20) decided to put "resilience" at the heart of their action during their last meeting in Australia, 15-16 November 2014. 

"Strengthening the resilience of the global economy and stability of the financial system are crucial to sustaining growth and development." (para. 12) 

"Strong and resilient energy markets are critical to economic growth." (para. 17)

We should better get used to the concept of resilience, because it is now used extensively, lately by the newly appointed European Commission ("resilient energy union with a forward-looking climate change policy") and now by the G20. Basically, it refers to the ability of complex systems like modern economies to recover and adapt when confronted with a shock or unexpected event. Inspired by mecanics, the phenomenon of resilience has been used extensively by economists (e.g. by Alan Greenspan) and has recently been extended to new fields, such as energy policy. What a resilient EU energy policy should be remains however to be defined in detail.

 

From an energy and environmental perspective, some keywords and commitments should be payed attention in the G20 conclusions. Notably, some actions are detailed and concrete, with short-term milestones. For example, the G20 calls for an improvement of the functioning of gas markets and energy collaboration, based on a series of principles. Similarly, energy efficiency is singled put with a 10 pages long Action Plan. The conclusions also contain positive signals ahead of  climate change negotiations, with mention of a legally binding commitment to be reached in 2015.

Hereafter are copied some statements of particular relevance for the field. Underlying is mine. Particular action plans and initiatives are highlighted in green.

 

The problem, as it stands today:

 

"the global recovery is slow, uneven and not delivering the jobs needed. The global economy is being held back by a shortfall in demand, while addressing supply constraints is key to lifting potential growth. Risks persist, including in financial markets and from geopolitical tensions." (1)

 

Emphasis on investments in infrastructures, including energy infrastructures:

"Tackling global investment and infrastructure shortfalls is crucial to lifting growth, job creation and productivity. We endorse the Global Infrastructure Initiative, a multi-year work programme to lift quality public and private infrastructure investment. ... We have agreed on a set of voluntary leading practices to promote and prioritise quality investment, particularly in infrastructure. To help match investors with projects, we will address data gaps and improve information on project pipelines." (5)

"To support implementation of the Initiative, we agree to establish a Global Infrastructure Hub with a four-year mandate. The Hub will contribute to developing a knowledge-sharing platform and network between governments, the private sector, development banks and other international organisations. The Hub will foster collaboration among these groups to improve the functioning and financing of infrastructure markets." (6)
 

"To strengthen infrastructure and attract more private sector investment in developing countries, we welcome the launch of the World Bank Group’s Global Infrastructure Facility, which will complement our work." (7)

 

Strengthening global economic institutions:

"Global economic institutions need to be effective and representative, and to reflect the changing world economy." (15)
 

International Monetary Fund (IMF) -

"We are committed to maintaining a strong, quota-based and adequately resourced International Monetary Fund (IMF)." (15)

World Trade Organization (OMC) -

"We need a strong trading system in an open global economy to drive growth and generate jobs. To help business make best use of trade agreements, we will work to ensure our bilateral, regional and plurilateral agreements complement one another, are transparent and contribute to a stronger multilateral trading system under WTO rules. These rules remain the backbone of the global trading system that has delivered economic prosperity." (16)

Increasing collaboration on energy and act on energy markets functioning:

 

"Increased collaboration on energy is a priority. Global energy markets are undergoing significant transformation. Strong and resilient energy markets are critical to economic growth. Today we endorse the G20 Principles on Energy Collaboration. We ask our energy ministers to meet and report to us in 2015 on options to take this work forward. Gas is an increasingly important energy source and we will work to improve the functioning of gas markets." (17)

"Improving energy efficiency is a cost-effective way to help address the rising demands of sustainable growth and development, as well as energy access and security. It reduces costs for businesses and households. We have agreed an Action Plan for Voluntary Collaboration on Energy Efficiency, including new work on the efficiency and emissions performance of vehicles, particularly heavy duty vehicles; networked devices; buildings; industrial processes; and electricity generation; as well as work on financing for energy efficiency. We reaffirm our commitment to rationalise and phase out inefficient fossil fuel subsidies that encourage wasteful consumption, recognising the need to support the poor." (18)

 

Taking legally binding commitments on climate change:

 

"We support strong and effective action to address climate change. Consistent with the United Nations Framework Convention on Climate Change (UNFCCC) and its agreed outcomes, our actions will support sustainable development, economic growth, and certainty for business and investment. We will work together to adopt successfully a protocol, another legal instrument or an agreed outcome with legal force under the UNFCCC that is applicable to all parties at the 21st Conference of the Parties (COP21) in Paris in 2015. We encourage parties that are ready to communicate their intended nationally determined contributions well in advance of COP21 (by the first quarter of 2015 for those parties ready to do so). We reaffirm our support for mobilising finance for adaptation and mitigation, such as the Green Climate Fund." (19)

Next G20 summit will be hold in Antalya, Turkey, 15-16 November 2015.

References:

Communiqué from the G20 Leaders, Brisbane Summit, 15-16 November 2014.