The Group of Twenty (G20) plays a central role in the global energy landscape since it accounts for over 80% of global primary energy consumption, almost all of world’s renewable power generation, and counts the four biggest oil producers among its members.
Over the past 12 years, energy took a growing importance in the G20 agenda. Energy was first mentioned at the Washington Summit in 2008. The first G20 energy ministers meeting was held in 2015. The Energy Transitions Steering Committee was launched at the 2018 Buenos Aires Summit.
In 2020, the energy-related G20 agenda has been dominated by two challenges: a short-term one, the destabilization of energy markets caused by the COVID-19 pandemic, and a long-term one, the vital need to transition towards cleaner energy systems for a sustainable future.
Indeed, the G20 has become a centerpiece of the discussion around oil market stability during the unprecedented demand collapse that has accompanied the COVID-19 shock to the global economy. The potential adverse effects of such a demand shock include the destabilization of vulnerable oil-dependent economies, compromising their financial ability to strengthen health systems and deal with the consequences of the COVID-19 crisis. Also raising concerns are the disruption of business plans and postponement of investments that may result in future market imbalances and oil price spikes, and job losses and company bankruptcies in the oil and gas industry and, through economic linkages, in other sectors.
An Extraordinary G20 Energy Ministers’ Virtual Meeting was held on April 10 to address energy markets stability. It had been preceded the day before by an Extraordinary OPEC and non-OPEC Ministerial Meeting that laid the foundations for collective action to rebalance the oil market. The G20 meeting’s statement acknowledged that maintaining the stability of oil markets throughout the crisis responses and during the recovery phase is critical.
Beyond the immediate threat posed by the pandemic, the G20 has advanced its agenda to address climate change. The G20 Energy Ministers have endorsed the Circular Carbon Economy (CCE) framework that builds on the principles of circular economy and applies them to managing carbon emissions: reduce the carbon that must be managed in the first place; reuse carbon as an input to create feedstocks and fuels; recycle carbon through the natural carbon cycle with bioenergy; remove excess carbon and store it. The CCE offers a holistic, inclusive, and pragmatic approach to managing emissions, with the ultimate goal of reducing the stock of carbon in the atmosphere in the most economically efficient way.
The CCE concept recognizes that the challenge of meeting climate goals will be nearly impossible to achieve without pursuing all options and including all countries – given the scale of the effort needed. The Kingdom of Saudi Arabia is currently engaged in developing and implementing a comprehensive national program with regulatory and financial aspects as well as collaboration arrangements to facilitate development and deployment of CCE technologies.
The European Union has released its new Circular Economy Action Plan earlier this year. Low-carbon - blue or green - hydrogen, a key enabler of the CCE, is part of the new European hydrogen strategy. Reliable access to energy is a key driver for economic development and social prosperity. Reducing energy poverty should also remain high on the G20’s agenda.
The Italian presidency of the G20 can continue advancing the CCE framework in the broader context of both the development of the circular economy and the action against climate change, two questions of crucial importance for Europe and the world at large. The importance and expertise of Italian companies in the energy sector can greatly contribute to successful advances in this endeavor.