Over the weekend, G20 finance ministers touted the need to discourage fossil fuel use.
Members of the G20 — an international organization composed of the United States, China, Germany, South Korea, the United Kingdom, and fourteen other top economies, plus the European Union — recently met to discuss climate change, taxation, and other global economic issues.
A communiqué from the G20 finance ministers stressed the importance of “carbon pricing” in moving away from fossil fuels:
Tackling climate change and biodiversity loss and promoting environmental protection remain urgent priorities… This mix should include a wide set of tools, such as investing in sustainable infrastructure and innovative technologies that promote decarbonisation and circular economy, and designing mechanisms to support clean energy sources, including the rationalisation and phasing-out of inefficient fossil fuel subsidies that encourage wasteful consumption and, if appropriate, the use of carbon pricing mechanisms and incentives, while providing targeted support for the poorest and the most vulnerable.
The group encouraged International Financial Institutions — which include the International Monetary Fund, World Bank, and African Development Bank — to pursue alignment with the Paris Agreement “within ambitious timeframes.”
Reuters reports that the G20 has never before jointly adopted such a policy:
G20 finance leaders recognized carbon pricing as a potential tool to address climate change for the first time in an official communique on Saturday, taking a tentative step towards promoting the idea and coordinating carbon reduction policies.
The carbon pricing mention on Saturday marks the influence of the Biden administration, which immediately rejoined the Paris agreement in January and has set out ambitious carbon reduction targets and clean energy and transportation investment plans.
Indeed, the Biden administration also drove the G20 to support a “global minimum tax” of at least 15% on corporations. United States Treasury Janet Yellen asserted that “we need to put an end to corporations shifting capital income to low tax jurisdictions, and to accounting gimmicks that allow them to avoid paying their fair share.”
Domestically, the Biden administration considers addressing climate change as a core policy priority. For example, President Biden stated during a speech to college graduates that climate change is a national challenge akin to the Vietnam War: “We faced an inflection point, and we did our best to seize that moment because things were changing so rapidly… As we put this pandemic behind us, rebuild our economy, root out systemic racism, and tackle climate change, we’re addressing the great crises of our time with a greater sense of purpose than ever before.”