Back to business: G20 energy minsters affirm drive towards renewables, innovation, cooperation

The cold snap that invaded the Patagonia resort town of San Carlos de Bariloche in recent days is fading now as the G20 Energy Ministerial wraps up and heads home.  A light rain cleared the slush off the streets, and a brilliant sunset greeted those who delayed their departure until the weekend. A handful turned to golf and braved the cool weather and the persistent wind off the eastern slopes of the Andes. Everywhere the cold reminds us of energy demand and the Alpine forests of the abundance of renewable biomass.

Trump Administration energy officials should feel right at home here — Bariloche’s connection to energy is really grounded in being home to Argentina’s nuclear energy R&D efforts.

Of the Argentine nuclear R&D, our friend Lionel scoffs, “It’s packed, packed with people doing nothing. Of 1400 people there, I’d say 800 of them do nothing except collect a salary,” he theorized. But that’s grumbling about the staffing levels rather than the work quality.

Unstable times

This year, as it happens, Argentina holds the G20 Presidency and the outgoing Germans and incoming Japanese worked with Argentine energy minister Juan Jose Aranguren to broker an ambitious re-affirmation of renewable energy goals, if expressed with cautious timelines and with deep understanding of the different energy mixes and starting points for G20 nations. The G20 meet-up was the first major international gathering since the disastrous G7 meeting in Canada, and was remarkably free of histrionics.

The G20 energy ministers affirmed here that “we live in challenging energy times” with Aranguren stating that “he need for persistent actions to address global challenges, including climate change and energy security. We recognize that energy transitions are essential for the development of long-term strategies that combine economic growth and the reduction of greenhouse gases.”

And, it has also been affirmed for us that we live in strange political times where the will to achieve the hard yards of renewable energy commercialization may be hard to come by, with the news that Argentina’s recently-embattled President Mauricio Macri sacked Minister Arenguren in a weekend political shake-up that owes it’s urgency more to the plunging Argentine peso than the state of renewable fuels adoption. But they are inextricably linked. 

The energy shake-ups and the machinations of a G20 Ministerial meeting are probably attracting more attention in Argentina and Germany this week than expected, not because of drama at the G20 but because Mexico pipped Germany and unheralded Iceland tied Argentina in the World Cup. Nations that expected to be charting a path towards soccer supremacy appear to be grasping for a distraction. The misfortunes of the peso and the imperatives of renewable energy are supplying some.

Uncertainty over the near-term fortunes of the cash-strapped Argentines are at the heart of the almost-40 percent drop in the peso’s value since April. Uncertainty fueled in part by a rapidly expanding global trade dispute which is hitting commodities from steel to soybeans. A successful appeal to the International Monetary Fund for a credit line came with a proviso that the Argentine Central Bank would not intervene to shore up the peso. Hence the plunging currency, and more political uncertainty for energy. 

The view of the G20

On renewable energy, the Ministers affirmed:

The progress achieved with regard to the development and deployment of renewable energy has been remarkable, benefitting from innovation and in part from significant cost reductions (notably for solar and wind, which are now cost competitive in many cases), but much more progress will be needed, not only in G20 member countries, but also worldwide. 

We encourage G20 members that opt to enhance their renewable energy strategies considering national circumstances, needs and priorities to accelerate their implementation, where appropriate.

We encourage increased investment and financing in renewable energy production, including through barrier reduction and risk mitigation initiatives, which is particularly important for developing countries.

On bioenergy the Minsters said:

Renewable energy progress should be accelerated beyond the power sector. We acknowledge that some renewable energy sources, such as bioenergy (including biofuels), solar and geothermal energy, can play an important role in some G20 countries in reducing emissions in the transportation, heating and cooling, and industrial sectors worldwide, depending on national circumstances and conditions.

On innovation, the Minsters stated:

We will foster innovation as one of the key drivers of the energy transitions processes. We will encourage and facilitate research, development, demonstration and deployment (RDD&D) of innovative, cleaner and efficient energy technologies, recognizing the need for these to be competitive and commercially viable. We will encourage greater cooperation in developing, sharing and applying best available technologies, and will also encourage multilateral development banks and finance institutions to facilitate investment, and technology transfer. We will support flexible energy systems and distributed generating capacities.

In these tough times for trade liberalization, the Ministerial view was a refresher:

We acknowledge energy security as one of the guiding principles for the transformation of our systems, and will continue to promote policy options that facilitate open, flexible, transparent, competitive and reliable markets for energy commodities and technologies. We stress the importance of diversification of energy sources, suppliers and routes, and the need to facilitate the proper conditions for continued and increasing investments to ensure sustainable, affordable, reliable, resilient and cleaner energy systems. Investment in infrastructure is essential, but a persistent financial gap remains. We encourage increased contributions from both public and private financial resources.

At the end of the G20 Meeting of Energy Ministers, representatives of the troika (Germany, Argentina and Japan) announced that consensus had been reached and a communiqué agreed upon. The G20 affirmed the group’s commitment to energy transitions that move towards cleaner, more flexible and transparent systems.

From consensus to action

“We would like to continue building on this achievement next year and have deeper discussions on the role of innovation in energy transitions,” stated Japanese Minister Muto, whose government will hold the G20 presidency in 2019.

“Now we have to move from consensus to action,” concluded Minister Aranguren at the end of negotiations late Friday, as the communique was released and the energy minsters gathered for a group photograph. Then, on Saturday the news broke that Argentine’s governmental crisis had led to the toppling of Aranguren.

The instability of inequity — of development and growth that becomes unstable because its blessings are not shared evenly — or in the eyes of many, equitably — was on the mind of Argentina’s president Macri at the outset of the G20 year. “We have decided on the slogan for our presidency” he said, “building consensus for fair and sustainable development.” We will lead the G20 based on the principle of putting people first, with a focus on equality and sustainability. During the 2008 crisis, the G20 proved its effectiveness. It prevented an international economic depression and strengthened financial framework. By contrast, today’s growth is firm; however, we must remain cautiously optimistic. This growth has not benefited everyone and this has breached many people’s confidence in globalization. The level of inequality is a daily reminder that implores us to ensure that growth reaches all.”

The Bottom Line

The equitable sharing in growth — whether it is developing nations seeking a bigger slice of development investment, or nations such as the United States seeking better trade terms — it appears to be the driving force in Sustainability at the moment, trumping climate change, if you’ll forgive the pun.

The G20 meets for its full session in November in Buenos Aires. If this energy ministerial has been any indication, the G20 will proceed with far less theatrics than the G7 and may accomplish far more — but even here, the sustainability of growth and the impact on governmental stability is having impact on renewable energy development at the most fundamental level — and equity of the equitable sharing type and not so much of the Silicon Valley type is the issue that will likely determine many of the faces of the people at these ministerial tables who will be putting people first.