Politics & Security

Relevance of G20 in Question as Energy Talks Hit Roadblock

With significant disagreements between G7 nations and the China-Russia camp, the G20 is struggling to show a united front in addressing critical energy issues.

Published

9 months ago

July 28, 2023

Takehiko Nagata

Energy ministers from G20 member nations in Goa, India on July 22. (© Ministry of External Affairs, India)

At the recent G20 energy ministerial meeting held in India on July 22, the focus was on finding a balance between decarbonization and economic growth. However, discussions hit a roadblock due to substantial disagreements between G7 nations and the China-Russia camp, particularly in light of Russia's invasion of Ukraine. Consequently, a joint statement could not be reached. This has added to the strain on the overall functionality of the G20 as talks continue to stall on energy security and decarbonization measures, including advanced energy solutions like hydrogen.

The Growing Divide Among G20 Nations

The G20 countries can be grouped into three main categories. Firstly, there are the G7 nations, Australia, and South Korea, which have expressed strong disapproval of Russia's invasion of Ukraine. They have also implemented economic sanctions in response. Then there is China, which is strengthening cooperation with Russia against the G7. Finally, there are countries like India, which adopt a neutral position. These countries maintain relations with both the G7 and the China-Russia side.

To curtail Russia's military spending, the G7 countries have intensified economic sanctions, including limitations on crude oil imports from Russia. However, Russian crude oil is still finding its way to India and China at prices below market rates. For example, a study conducted by India's Bank of Baroda in May revealed that the proportion of Russian crude in India's imports surged from 2% in 2021 to 19.3% in 2022. Similarly, China has also been increasing its imports of Russian crude.

*Workers next to a transmission tower in Mumbai, India. (© Reuters)*

The Relevance of G20

Certain countries within the G20 have strong affiliations with China and Russia. These include Brazil and South Africa, which are part of the BRICS group. Additionally, Saudi Arabia and Russia lead OPEC+, a grouping of oil-producing nations that consists of both members and non-members of OPEC.

Energy-consuming countries such as Japan, the United States, and European nations are urging oil-exporting countries to increase their oil production to control rising prices. Nevertheless, Saudi Arabia is reducing oil production in line with Russia.

As for decarbonization, approaches diverge between advanced economies and emerging nations. The former strives for a swift transition to renewable energy, while the latter prioritizes a balanced approach in consideration of economic growth.

G20 nations, both advanced and emerging, have a history of presenting a united front in tackling global economic issues. However, G20 ministerial meetings have struggled to reach a consensus on a joint statement for over a year. Japan's Minister of Economy, Trade, and Industry, Yasutoshi Nishimura, expressed his disappointment during a press conference, stating, "It is unfortunate that we couldn't reach an agreement on everything." As the situation continues to evolve, uncertainty lingers over the relevance of G20.