G20 finance ministers signed an official communique on July 10 endorsing carbon pricing as an effective tool to mitigate the impacts of climate change, as reported by Reuters later that day. Following a meeting of the G20 Financial Ministers and Central Bank Governors (FMCBG) in Venice, Italy, the communique highlighted carbon pricing mechanisms and incentives within its list of tools to address climate change. Apart from carbon pricing, the tools also included investing in sustainable infrastructure and technologies, phasing out inefficient fossil fuel subsidies, among others. This marked the first time that carbon pricing appeared in the G20’s official language, according to French finance minister Bruno Le Maire.

At the Venice International Conference on Climate on July 11, the day after the communique’s release, notable speakers echoed with the G20’s language on carbon pricing. William Nordhaus, a US economist and Nobel laureate, acknowledged high carbon prices as a crucial tool to incentivize emissions reduction and suggested countries join hands on implementing a carbon tariff to prevent free-riding. Christine Lagarde, president of the European Central Bank, also called for a more clear, effective, and equitable carbon pricing mechanism.

G20, under the Italian presidency this year, put a great emphasis on global green recovery and climate change issues. In a meeting of the FMCBG this April, the group recognized tackling climate change and promoting environmental protection as urgent considerations in the global recovery from the COVID-19 pandemic. Additionally, in a meeting dedicated to climate issues on June 23, the G20 Finance Track Deputies shared progress and views on several critical matters such as green investments and policies, the role of multilateral development banks (MDBs), and financial disclosure standards. The meeting culminated in a statement demanding a discussion of comprehensive low-carbon transition strategies at the Venice Conference this July. The dialogue was expected to continue in other forums throughout this year, including the G20 Climate and Energy Joint Ministerial Session in October, as well as the United Nations Climate Change Conference in November.

Sources:

https://www.reuters.com/business/sustainable-business/g20-recognizes-carbon-pricing-climate-change-tool-first-time-2021-07-10/

https://www.ft.com/content/9cd74b8f-4d6c-4cf8-a249-87c0acb1a828

https://www.g20.org/wp-content/uploads/2021/07/Communique-Third-G20-FMCBG-meeting-9-10-July-2021.pdf

https://www.g20.org/2nd-finance-ministers-and-central-bank-governors-meeting.html

https://www.g20.org/g20-green-agenda-towards-the-venice-international-conference-on-climate.html

https://sdg.iisd.org/events/g20-climate-and-energy-joint-ministerial-session-2021/