How the G20 Summit Will Shape the Future of World Economy and Climate Change - Seeker's Thoughts

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How the G20 Summit Will Shape the Future of World Economy and Climate Change

The G20 unites 20 of the most influential industrialized and developing economies from around the globe, representing approximately 80% of global GDP and two-thirds of world population.

The G-20 comprises world leaders, finance ministers and central bank governors as well as representatives of business and civil society groups. Its Sherpa Track addresses socioeconomic issues such as agriculture, anti-corruption, culture, climate change development digital economy education employment energy transitions tourism.

1. Trade

The G20 emerged during the 2008 financial crisis as a leaders-level forum to address global economic issues. At first, its mandate focused on immediate post-crisis recovery and rebalancing; since then it has expanded to address longer-term growth and sustainability objectives. Today it comprises major economies accounting for 80% of global GDP, 75% of international trade volume, and two-thirds of the global population.

As the G20 progresses, its focus will shift toward addressing key global challenges like inclusive growth and poverty reduction, climate change mitigation, global governance reforms, multilateral reforms and digital development. Furthermore, Japan will play a pivotal role in furthering these efforts during their 2022 Presidency.

Shinzo Abe has already made clear his intention to push for concrete action on sustainable development goals, particularly climate change, reform of WTO and other multilateral institutions, as well as admission of African Union (AU) as permanent member into G20 membership, further increasing diversity within it and showing commitment towards fighting global inequality for greater planet-wide peace and stability.

As humans continue to have an impactful presence on Earth, the global community is increasingly concerned about our impact. Evidenced by record temperatures across swaths of the globe, melting polar ice caps, and devastating wildfires - the G20 summit will focus on climate change more thoroughly and comprehensively than ever before.

Campaigners will question the summit's commitment to renewable energy after it failed to set targets for a rapid phase-out of fossil fuels. With major fossil fuel producers like Saudi Arabia, Russia and Australia sitting around the table, reaching an agreement was always going to be difficult. G20 members may recommit themselves to increasing renewables while decreasing emissions by 2030 but lacking an official binding target is disappointing.

2. Climate Change

As part of its response to the global financial crisis of 2008, the G-20 transformed from an informal summit of industrialized economies' leaders into an important forum for discussing economic and world problems. Since its formation, this group has made great strides while trying to find a balance between urgent crises and ongoing global challenges. Despite significant achievements so far, more work needs to be done for its success to become sustainable over time.

Climate change presents one of the greatest threats to global growth and development, threatening its prosperity and expansion. According to their most recent assessment from the International Panel on Climate Change (IPCC), "climate-related disasters could cost global GDP up to 1.6% of total income in 2100," with greater losses occurring in poorer tropical nations with net present value losses exceeding 20% of current income in net present value terms.

Climate change impacts are multifaceted and will differ according to country, ranging from natural disasters and agricultural climate impacts to biodiversity loss and water scarcity. Energy choices also play a large part - for instance, renewables or energy efficiency upgrades in buildings or appliances could reduce emissions significantly or strengthen disaster resilience through early warning systems or tighter urban planning regulations, for instance.

To address these and other issues, the G20 Summit must adopt a more comprehensive policy direction. Richer countries - particularly upper-middle income nations that account for most global emissions and will likely face greater climate risk - should make mitigation their domestic priority by cutting fossil fuel use and pushing out carbon pricing mechanisms. On the other hand, lower income nations require insurance and sustainable growth - that is rapid payout mechanisms to soften short-term impacts of climate catastrophes as well as long-term support through economic expansion; unfortunately global financing mechanisms currently hinder both.

To meet this challenge, the G20 must make its financing more sustainable. For example, all creditors--private sector banks as well as multilateral development banks--should include climate resilient debt clauses in loans to developing nations (as the U.S. Export Import Bank plans on doing for specific projects). Such clauses will unlock funding for low-carbon investments that can help tackle one of our world's most pressing problems more justly and equitably.

3. Financial Markets

The G20 is one of the world's premier forums for international economic cooperation, with decisions made there having significant and far-reaching ramifications on global economies. Therefore, understanding their inner workings is paramount to understanding their impact on our futures.

This summit, established to bring together finance ministers and central bank governors of the world's major established and emerging economies, first convened in 1999 in response to the Asian Financial Crisis before expanding to include leaders after 2008 global Financial Crisis. Many experts credit G20 with taking swift actions that averted global depression while maintaining economic stability.

However, G20 has come under criticism for lacking transparency, encouraging trade agreements that benefit large corporations, slowing efforts to combat climate change and failing to address inequality and threats to democracy as global issues. Due to these shortcomings, reaching consensus has become more challenging amongst its membership on these global challenges.

G20 members have long struggled to come to an agreement on issues like how to handle economic shocks that disproportionately hit emerging markets, like Ukraine's conflict and rising energy costs which forced countries to seek emergency IMF loans causing inflation spikes that hit emerging market currencies hard. Furthermore, they've had difficulty agreeing on ways to prevent another financial crisis since 2008 except with its bailout of Lehman Brothers (except after Lehman Brothers' collapse of course!).

Even with its differences, the G20 still wields considerable influence as an arena for global economic governance. Being flexible compared to other multilateral institutions allows it to adapt quickly to new challenges and drive reform momentum forward. Furthermore, leaders can use it as a forum to discuss domestic agendas or make bilateral commitments that do not form part of formal summit declarations.

President Park shared her vision for a digital future with German Chancellor Angela Merkel and Italian Prime Minister Enrico Letta; Japanese Prime Minister Shinzo Abe discussed it with Russian President Vladimir Putin; French President Emmanuel Macron shared his plans to reform European Union with counterparts from Italy and Czech Republic.

4. Energy

While the G20 was initially formed to find lasting solutions to an ongoing global economic crisis, summits now also address pressing concerns for many developing nations such as climate change, sustainable development, food security and emerging technology. Rich nations, alongside major emerging economies in this group, can lead the way toward creating a greener, fairer future for everyone.

G20 countries possess both the financial capacity and energy resources to accelerate a transition towards zero emission economies quickly, acting as catalysts to meet Paris climate goals more efficiently. Unfortunately, progress this year was hampered by differing democratic characteristics among its leaders as well as G7 members' unwillingness to condemn Russia over Ukraine war issues.

China's rise to authoritarianism coincided with an increased investment in renewable energy - one of the cornerstone policies for climate action. At the same time, India saw its democracy decline while it supported 88% of world coal power plant construction without carbon capture technologies - this being why Rome communique only mentioned supporting just transition twice and did not connect human rights and climate change together.

G20 leaders must balance the needs of both high-income and low-income countries when devising their energy strategies. Climate change impacts those living on lower incomes most severely; drought has devastated parts of Africa while heat waves have paralyzed nations across the planet; ocean temperatures rise and polar ice caps melt - disasters caused by fossil fuel-powered energy systems are compounding them; the G20 can lead the way towards creating sustainable, equitable and clean energies that promote economic growth while providing food security, water security, job creation, poverty reduction and quality education to all its citizens.

The 2023 Summit in New Delhi will provide an opportunity to build such a bridge, with discussions focused on sustainable energy, economic development for low-income countries, resolving fallout from Ukraine war and addressing challenges of global governance such as multilateral debt reform, international cooperation in innovation and more inclusive G20 membership structure. India's theme 'Vayudhaiva Kutumbakam (The World is One Family) will help frame its agenda at this summit.

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