SMOG - Energy transition: No consensus from G20 countries on how to cut fossil fuels

2023-07-24 07:41:19 ET

Delegates from most of the world's largest economies met in Goa, India, over the weekend to discuss the energy transition as extreme heat takes hold in many areas across the globe . The G20 Energy Transitions Working Group Meeting was intended to set tone and strategy, and while there were some points of agreement, the summit ended without any consensus on phasing out fossil fuels. Investors in energy and renewables are especially taking note ahead of a gathering of G20 leaders in September and the COP28 forum in December.

Snapshot: Greenhouse gases like carbon dioxide, methane and nitrous oxide continue to reach new record highs, while increasing temperatures, a loss of biodiversity and extreme weather events are said to be growing in intensity. It doesn't help that much fossil fuel manufacturing usage is being outsourced to developing nations, where deregulation of environmental protections has been used to advance their economies. This can even be seen among countries that are powering the green revolution, like nickel smelting for EV batteries, with further criticism being leveled at the sustainable commitments of some of the world's most profitable companies.

Many nations are also attempting to shore up their domestic fuel stockpiles as Russia's war in Ukraine and geopolitical tensions elsewhere threaten to weaponize energy supplies. The U.S. Senate last week voted to block China from purchasing oil from the Strategic Petroleum Reserve, while U.S. Energy Secretary Jennifer Granholm reiterated calls for additional supplies as "it gets dangerous when the prices are so high." At the same time, the American government has plowed billions of subsidies and tax breaks into businesses involved in electric vehicle technology and the energy transition, but other countries may not be able to finance such initiatives or those priorities, and that makes finding a consensus quite complicated.

Outcome statement: "Given that fossil fuels currently continue to play a significant role in the global energy mix, eradication of energy poverty, and in meeting the growing energy demand, the importance of making efforts towards phase down of unabated fossil fuels, in line with different national circumstances was emphasized by some members." The gathering also failed to set a specific global goal for renewable energy development, and there was also disagreement about the effectiveness of carbon capture technologies. To note, G20 countries account for more than three-quarters of global emissions and world's gross domestic product.

ETFs: NASDAQ: ICLN , NYSEARCA: CRAK , NYSEARCA: PBW , NASDAQ: QCLN , FAN , PBD , ACES , CNRG , SMOG , ERTH

For further details see: