Global commitment issues on display at the G20

The G20’s impressive declaratory record on energy cooperation hides serious practical shortcomings. www.shutterstock.com

With the Brisbane G20 Leaders Summit only a matter of weeks away, Australia is increasingly succumbing to G20 fever. Rarely does a self-declared middle power such as Australia get to play host to such a key global institution, arguably the most important intergovernmental dialogue held here since the Sydney 2007 APEC Summit.

So what should we expect this G20 Summit to deliver for global economic governance? The ultimate effectiveness of the Summit will not be decided in Brisbane in November. Rather it will be decided months (and possibly years) later once leaders return home and wrangle with the question of how to implement what has been agreed.

Commitment issues at the G20?

Apart from the normal anxieties about traffic chaos in the Brisbane CBD, most Australian discussion of the G20 has been overwhelmingly positive. The Commonwealth government has claimed it will allow us to “influence the global economic agenda”, while commentators have labelled it a “diplomatic coup” that may allow Australia to exercise “both regional and global leadership”.

However, not all analysts share such a sanguine view of the G20’s role in global economic governance. The Summit stands accused of being a self-appointed club of the powerful with little legitimacy outside the minds of its own members. Its track record at making promises is unfortunately much stronger than actually delivering on them, and some have argued its crisis management functions have been little more than “window-dressing”.

One of the major difficulties facing the G20 is a problem I have somewhat cutely labelled “commitment issues”. As a summit body, the G20 does not make formal rules or treaties, but simply issues “declarations” which governments must then implement in the following months and years. Unfortunately, G20 members often fail to follow through on promises made, due to a lack of commitment to the policy reforms declared at summits.

These commitment issues points to a rhetoric-reality gap between the promises made at G20 summits and their actual impact on global economic problems.

Energy at the G20 - lots of talk, only some action

Energy cooperation provides an instructive example of the commitment issues currently facing the G20. Soaring world prices, extreme market instability and the challenges associated with a move away from hydrocarbons, make energy security one of the most important global economic issues today.

The G20 has made energy security one of its major focus areas, including energy policy commitments in every one of its summit declarations since 2009. However, its impressive declaratory record on energy cooperation hides some serious practical shortcomings.

First, the G20 has placed considerable emphasis on the promotion of energy efficiency and clean energy technologies. Governments have committed to enact such policies at the 2009, 2010, 2011 and 2013 summits. Yet though promoting clean and efficient energy technologies is certainly a laudable goal, it is also an extremely easy promise to make. As several analysts have pointed out, practically every member of the G20 already had such policies several years prior to 2009. This G20 commitment was little more than an “agreement to do what we’re already doing”.

Second, the G20’s energy efforts suffer from vagueness. This is particularly true of the agreement to take steps towards phasing-out inefficient fuel subsidies made at the 2009 Summit. The agreement has already been reaffirmed three times since then. However, the commitment is weak as it does not require members to actually reduce fuel subsidies - members simply have to make an attempt. It also allows members themselves to define whether their subsidies are inefficient or not. Indeed, seven members claimed their fuel subsidies are not inefficient, and therefore not covered by the commitment at all.

Third, the lack of enforcement or monitoring powers means compliance with G20 energy commitments has at best been patchy. According to compliance reports prepared by the G20 Research Group, six members failed to fully implement energy efficiency commitments made at the 2013 Summit. Only 11 have followed through on fuel subsidy reforms agreed in 2012. The result is considerable unevenness in energy policy reform. Some governments are paying little more than lip-service to G20 energy policy promises.

The case of energy security demonstrates the inherent difficulties facing a summit body like the G20. While it has proven capable of making powerful statements on matters of significant global importance, ensuring these commitments are both well-designed and complied with is another matter entirely.

Therefore, the success of the G20 Brisbane Summit must be measured not be the promises made on the day, but whether leaders follow-through once they return home.