Climate Policy Factbook

BloombergNEF outlines the priority areas for government action in the fight against climate change.

This article was written by Victoria Cuming, Head of Global Policy and Maia Godemer, Associate, Sustainable Finance at Bloomberg.

COP27 key messages

This year, the UN climate summit in Sharm el-Sheikh aimed to build on realizing the many pledges and targets announced at COP26 in 2021. At least part of the answer would be for nations to phase out fossil-fuel subsidies and supports, price carbon emissions, and implement mandatory climate-risk disclosure for investors. The Climate Policy Factbook evaluates the Group of 20 countries’ progress in these three key areas where governments could act to make tangible progress toward achieving the Paris climate goals. The third edition of the Climate Policy Factbook includes updates, new data and an improved methodology.

G-20 progress on three priority areas

G-20 governments and state-owned institutions provided some $693 billion in support for coal, natural gas, oil and fossil-fuel power in 2021, based on provisional estimates. This was the highest total since 2014, driven by increased aid in the form of retail energy price subsidies, tax breaks, and budgetary transfers. In all, coal specifically attracted $20 billion of government support in 2021.
Fossil-fuel support in 2020 may have been slightly lower, at $598 billion, because reduced energy use due to the pandemic allowed governments to spend less. But even this sum had the potential to fund 833 gigawatts (GW) of new solar PV power plants across the G-20 – nearly six times the actual volume of solar capacity built in those countries by 2021.
Some G-20 nations have made progress on phasing out coal-fired power generation. But of the six that signed pledges to do so at COP26, five actually boosted their reliance on coal in 2021. In any case, the vague language and exceptions in such pledges often give governments plenty of wiggle room.

Quite a few G-20 countries have made progress in implementing or improving programs that put a price on carbon. This has included new taxes or markets at the national or subnational level (Canada, Indonesia, Russia, the US), higher tax rates (South Africa), scheme reforms (Australia), and roadmaps (India). Europe and Canada remain the G-20 leaders by price level, emissions coverage, and concessions for participants.
Policymakers globally now increasingly voice concerns over the risks climate change poses to financial stability. However, the approach of the vast majority of G-20 governments has been to encourage financial institutions to undertake climate-risk analysis by publishing voluntary guidance and to launch pilot groups, not to regulate. Such a light-touch approach can allow financial institutions to delay action.
In the G-20 only the UK and the three EU member states have mandated specific nationwide climate-risk regulations for investors. The biggest change in 2022 has come in the US with new draft rules. Even if these regulations are finalized, their long-term stability is uncertain due to anticipated lawsuits and a possible future administration change.

Read the BloombergNEF Climate Policy Factbook here.

Continue to the next chapter,
Bloomberg Intelligence: Macro outlook for the global economy >>