Climate, energy and environment ministers from G7 countries have committed to increase international spending on nature and backed the historically controversial concept of “avoided emissions”, among a host of other initiatives.
Ministers from the advanced economies agreed on actions in line with the Global Biodiversity Framework (GBF) and set new targets on renewable energy after convening in Japan over the weekend.
As part of this, ministers reiterated their promise to substantially increase national and international funding for nature by 2025, as well as aligning all relevant fiscal and financial flows with the GBF.
Ministers also committed to dedicating a significant amount of climate finance to maximise co-benefits and synergies in addressing climate change and the biodiversity crisis, and recognised that nature-based solutions can deliver mitigation, while offering significant benefits for adaptation.
The bloc has now launched the G7 Alliance on Nature Positive Economy (G7ANPE), which will serve as a voluntary forum to share best practice on nature-positive topics and to implement the terms of the GBF.
Two pillars have been selected as focus areas for 2023: sharing experiences on business opportunities and enhancing corporate disclosure.
The first pillar will be overseen by Japan’s business federation this year, with workshops and outreach targeting the private sector and financial institutions planned for Q3 and Q4. Outcomes will be compiled into a report to be presented at COP16 on biodiversity, which will be held in Turkey next year.
The second pillar will be organised by the Japanese environment ministry, in conjunction with other government ministries. The first workshop will be held next month and the results may be shared with the TNFD, or other new reporting frameworks released in 2023.
Ministers said the initiative could turn its attention to other nature-positive topics beyond 2024, including natural capital accounting, impact measurement, accounting practices and sustainable value chains.
Marianne Haahr, Global Canopy’s nature-related finance director, said it was crucial that the G7ANPE discussion begins by focusing on sectors most at risk of causing biodiversity loss.
“Land conversion is the biggest driver of biodiversity loss and agriculture is a key contributor to its impact, and also consumes 70 percent of all freshwater globally,” she said.
“The G7 should find a way to incentivise large companies and financial institutions to invest further upstream in the food value chain in order to transition to regenerative food production without small-scale suppliers having to carry all of the transition costs.”
Separately, G7 members said there is “value in acknowledging the contribution” of avoided emissions – a methodology in which the actual emissions of a zero or low-carbon project are compared with the hypothetical emissions of a high-carbon alternative.
The measure has garnered controversy in the past after some institutions, including remarks from Brookfield’s Mark Carney, claimed a reduced carbon footprint due to emissions avoided as a result of green or lower-carbon holdings. PCAF, which develops standards to measure financed emissions, has so far declined to provide guidance on avoided emissions.
According to the G7, avoided emissions “should not be subtracted from Scope 1-3 emissions, nor [nationally determined contributions]” and should not be expanded into a voluntary crediting mechanism.
However, the group indicated that the measure can be useful to provide recognition of the cleaner goods and services needed to reach net zero, and to promote investments and capital expenditure into those areas.
Ministers referenced recent guidance issued by the World Business Council For Sustainable Development on the topic and called for further discussion among the private sector to develop an international standard.
In addition, the G7 ministers have agreed to start working on implementing a new global database for emissions related to crude steel production and steel products under a workstream focused on heavy industry sectors.
The resource will aim to provide comparable data for steel production from all facilities, incorporate multiple measurement methodology, and have a maximum two-year lag. The G7 is considering extending the project’s scope to include the major steel-producing countries of the G20.
Lastly, ministers have agreed a set of high-level principles for high-integrity carbon markets, encompassing certification standards for producers and reporting processes for users of credits.
The member states were, however, unable to agree on a 2030 deadline for phasing out coal despite pressure from Canada and others, according to Reuters.