Signed photo of the G20 leaders in Antalya, Turkey.

Overshadowed by the terrible events in Paris, the G20 leaders’ meeting last weekend could be forgiven for being preoccupied as they debated their communiqué on climate change ahead of COP21. This UN summit on climate change is now due to start in that very same city in less than two weeks’ time.

These 20 countries, while a small minority of the world’s nations who will be represented at the summit, are nevertheless the richest and most powerful.

Precious time was apparently spent on discussing whether reference to the 2°C warming limit should be included in the statement, with Saudi Arabia and India resisting. India didn’t even want the G20 to interfere in the Paris talks and blocked a general reference to discussions on “periodic monitoring”.

But China has already agreed with France to this idea that there should be a five-year stocktaking assessment of national climate pledges.

The final statement did recommit the rich world to staying within the 2°C limit on global warming and to phasing out “inefficient” fossil fuel subsidies.

“We recognise that 2015 is a critical year that requires effective, strong and collective action on climate change and its effects,” the final communique said. “We reaffirm the below 2°C goal.”

The statement added:

Climate change is one of the greatest challenges of our time. We affirm our determination to adopt a protocol, another legal instrument or an agreed outcome with legal force under the UNFCCC that is applicable to all Parties. Our actions will support growth and sustainable development.

But Laurent Fabius, the French foreign minister, said the “declaration was too weak” and had been rejected by the US and some EU countries.

“After long negotiations through the night, we managed to get the two-degree-goal into the agreement,” German Chancellor Angela Merkel said afterwards. “However, we also made clear that a lot of negotiating remains to ensure that we make progress at the Paris climate summit. It has to be a success, and Germany will do anything to assist France.”

On Wednesday this week the UK, where the industrial revolution began, committed also to phasing out its coal-fired power stations by 2025, although it did not commit to phasing out fossil fuels. Instead the Energy and Climate Change Secretary, Amber Rudd, announced that the country would build a new generation of gas-fired power stations. Gas-burning emits roughly half the greenhouse gas emissions of coal-burning for the same amount of power.

The G20 statement committed to “rationalising inefficient subsidies over the medium term”, which did not provide the clarity sought by campaigners.

Coincident with the G20 summit, the Overseas Development Institute issued a report showing that its members are still subsidising coal, oil and gas production by a staggering US$452 billion a year.

“Heads of state could have provided a clear and powerful signal ahead of the climate summit by putting a date for the end of fossil fuel subsidies, and agreeing to stop funding fossil fuel projects around the world,” Ümit ?ahin from Turkish group Iklim için (For The Climate) said.

Regarding the threat to the world economy of companies and investors being stranded with valueless fossil fuel assets, a proposal by the Financial Stability Board for a climate risk disclosure taskforce was kicked into the long grass with a promise to “ask the FSB to continue to engage with public- and private- sector participants on how the financial sector can take account of climate change risks”.

Bank of England Governor Mark Carney suggested that businesses should be forced to reveal their carbon footprints so that investors could judge how exposed they are to the risk.

A reference to differentiation was removed from an early draft of the communiqué, though it was mentioned in a separate statement from Brazil, Russia, India, China and South Africa. These BRICS nations called for emissions pledges to be “differentiated” based upon national circumstances, thereby favouring industrialised nations doing more to limit emissions than developing ones.

There are no guarantees that climate financing will be part of the Paris agreement and even mention of the 2°C pledge is not backed up by commensurate measures, according to Kiri Hanks, energy policy adviser for Oxfam.

The Fifth Estate noted last week that there is a significant gap between the commitments, both financial and technical, made by national governments in their INDCs ahead of COP21, and the money and action required to keep global warming within 2°C.

But at a special salon held in the city of London last Thursday by The Fifth Estate, delegates from the real estate and banking industries felt optimistic that climate bonds could fill this gap.

Sean Kidney, CEO, Climate Bonds Initiative, told those present at the salon that there was great enthusiasm in the financial markets for Green Bonds. 2015 has seen the issuance of these bonds climb to around US$50 billion and Sean predicted this would reach US$300 billion in 2016.

These bonds are issued with the proviso that they are spent on action to tackle climate change, whether by installing renewable energy or promoting energy efficiency and other low carbon infrastructure. They are favoured by pension and insurance funds because of their liquidity.

“People who hold them dispose of their non-green bonds first if they need to dispose of bonds at all,” he said. This makes them more valuable in the secondary market. They also already fetch a good price in the primary market.

He said they were most appropriate for the public sector and were being issued by municipalities around the world. He said the treasurers of all municipalities that have already issued them were, to begin with, “sceptical of green bonds, but after issuing them were fully converted because they received terrific feedback and lots of kudos for doing so”.

“The goal we have, working backwards from the IEA’s scenarios, shows that we are not moving fast enough and most people don’t understand the potential of green bonds and the fact that they are able to make rapid changes,” Kidney said.

To this end, The Fifth Estate will shortly publish an ebook on the topic, particularly in relation to energy efficiency in buildings. As buildings are responsible for between 30-40 per cent of global greenhouse gas emissions, but altogether comprise two-thirds of global asset values, Kidney believes the potential market is huge.

David Thorpe is the author of:

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