Between a rock and a hard place: Argentina preparing a difficult G20 presidency

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Between a rock and a hard place: Argentina preparing a difficult G20 presidency

Blog post by Gerrit Hansen, October 2017

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The Hamburg G20 summit saw an impressive showdown between US President Donald Trump and the other G20 members regarding climate change and the fate of the Paris Agreement (PA). After the unprecedented split in the leader’s declaration, and the acceptance of the G20 action plan on climate and energy for growth (CEAP) by all G20 members except the US, all eyes are now on the incoming Argentinean presidency under President Mauricio Macri – will he find a way to back up the Hamburg result and continue the work towards the long-term climate goals within the G20 while preserving the unity of the group?


The situation could hardly be more difficult for Argentina, due to the open split between the US and other members concerning the global climate crisis. With the clear stance of US President Trump in the support of fossil fuels and his official announcement that the US will leave the Paris Agreement, what has been a consensus position in the G20 for years – the support of the work of the United Nations Framework Convention on Climate Change (UNFCCC) and lately also the shared commitment to implement the Paris Agreement – is in jeopardy. At the same time, the unique situation that led to the Hamburg outcome is unlikely to repeat itself: by now, the US administration is more established and its policies regarding climate change are no longer “under revision” but going head on against the pathways to global decarbonisation, the regime of international cooperation and support for those most vulnerable agreed in Paris. Also, the US might be able to find allies in its opposition to dealing with climate change in the framework of the G20 – countries like Russia, Turkey and Saudi Arabia have never been enthusiastic about giving climate policy too much priority in the first place. Other nations also expressed reservations about G20 as a forum to debate climate: because they want to see climate being addressed in the UNFCCC and are weary of parallel processes and the drain on resources and efficiency they may create, especially seeing how a consensus based body such as the G20 might be of limited use to the matter, given the current circumstances.

The Argentinean Presidency will not release their exact agenda before it officially takes over on December 1st. What they have let on so far is that poverty, employment and education will be the leading themes – with an approach more tailored to the needs and interests of the emerging economy members of the G20. Argentina also stated the intention of a strong regional focus, cooperating closely with Brazil and Mexico and inviting Chile as the guest country to the G20 table. The cooperation within the G20 Troika – consisting of the incoming (Argentina), current (Germany) and last term’s (China) presidency – should ensure a certain level of continuity and consistency across work streams.

During 2017, an unprecedented coalition of NGOs, trade unions, businesses, think tanks and foundations repeatedly called for ambitious implementation of the Paris Agreement by the G20. Investor groups came out in support of the integration of climate risks into financial accounting, including scenario based risk assessment and disclosure. The G20 engagement groups of Business (B20), Civil Society (C20), and Think Tanks (T20) issued a joint statement in support of the Paris agreement and a sustainable energy transition, asking the G20 for clear long-term frameworks, an end to fossil fuel subsidies and an introduction of effective carbon pricing. The same coalition plus trade unions (Labor 20) and Foundations (F20) also sent a letter to the Argentinean Sherpa, expressing their support for the implantation of the CEAP and a clear focus on the climate-energy nexus.

Despite this momentum and clear demands from many G20 members to continue intensive work on climate issues, pressure from the US to drop climate from the agenda completely and ambiguous positions of some other countries put the G20 as an institution and the presidency in particular in a very tricky situation.

Argentina now has to navigate a difficult route: They need to avoid any impression of backsliding – any move that indicates that G20 countries are not committed to the implementation of the PA would be extremely harmful under the current circumstances, and will be fiercely opposed by many G20 members. Also, Argentina aspires to be seen as a transition leader and reliable partner in the region. The current government is strongly committed to the national implementation of the Paris agreement – albeit with a focus on developing natural gas as a so-called transition fuel in the energy sector – and very proud of recent achievements in the area of renewable energy.

One route Argentina intends to take is to focus it's climate agenda on adaptation – a less conflictive topic (as long as the question of raising and distributing finance is set aside). Additional issues under consideration include climate-resilient infrastructure, long-term low greenhouse gas emission and climate resilient development strategies, facilitating support for implementation of the nationally determined contributions (NDCs) and green jobs. According to the report out of the G20 Finance Ministers and Central Bank Governors’ Meeting in Washington DC mid-October, Argentina announced that for 2018 one of the two high priorities within the G20 Finance Track will be Infrastructure Financing, especially through financializing infrastructure as an asset class. To safeguard the global climate goals, it is imperative that such work adequately considers climate and transition risks. The recent G20 work on green investment and a more sustainable and climate resilient financial system could provide synergies here. The second top priority will be the future of work. Here, green jobs could be addressed across a yet-to-be determined climate forum, the finance track and the employment work stream. Fostering a just transition has broad support across the G20 engagement groups, and is also clearly linked to the principle of Agenda 2030 of leaving no one behind that was a key priority for China in 2016.

Regarding the core issue of climate and energy, it seems yet unclear whether the joint sustainability working group, which united the longstanding energy (sustainability) working group with a newly founded climate sustainability working group under the German presidency, will be continued. Sources close to the Argentinean presidency expect the formation of an “energy transition group” that will address the directly energy-related parts of the CEAP. However, whether and how exactly climate change and more specifically the Paris Agreement will be incorporated into the agenda is still in the open. This is a risky approach: Without a clear link to the long-term goals of the Paris agreement, the term “energy transition” has no real meaning and even runs the risk of being re-branded: Transitioning to a cleaner, modern, sustainable energy system – without specifying the term sustainability or the target, i. e. GHG-neutrality by 2050 – can translate into all sorts of approaches: Modernization and incremental improvements in technologies for fossil fuel production and use (“clean coal”), a focus on energy security through nuclear power and use of domestic fossil resources or the substitution of more carbon-intensive fuels by natural gas. Such an “energy transition“ shares some of the benefits of a Paris-compatible energy transition towards net-zero emissions, regarding e. g. reduced health risk from local air pollution. However, it will either fail to deliver on the long-term climate goals or risk large amounts of stranded assets once its failure to produce sufficient emissions reductions becomes apparent.

Given the conflicting positions and the consensus principle within the G20, one should not expect too much progress towards rapid decarbonisation from this group in the coming year. But it is important to remain vigilant and reign the fossil fuel lobby’s attempts to use the G20 as a forum to greenwash their old business models and to rewrite the global narrative of a sustainable energy transition.

Argentina will have to steer the G20 through difficult waters. However as much as Argentina would like to avoid a split within the G20, open conflict with the US is not limited to the area of climate change. Given the Trump Administration’s positions on central G20 issues such as financial market regulation, free trade and multilateralism in general, it is hard to imagine the 2018 G20 process moving forward without severe disruptions.