Explained: What Is The G7 Climate Club, How Will It Fight Global Warming?

Olaf Scholz, the German chancellor, announced the creation of an open, international climate club for nations that want to collaborate in the fight against global warming on Monday following a video conference with the other G-7 leaders.

Until the end of the year, Germany holds the G-7 presidency; after that, Japan assumes that role. Scholz said the new forum group "is not intended to be a G-7 initiative; rather it is to be a global undertaking."

"With the climate club and the socially just transition of our industries toward climate neutrality, we are making an important contribution to achieving global climate targets," the chancellor said, as cited by the Economic Times.

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What is a climate club?

Yale economist William Nordhaus came up with the idea of a climate club in 2015, and it has since become well-liked in policy circles. The 2018 Nobel Prize in Economics was also awarded to Mr. Nordhaus for his work on climate change.

The economist claimed in his writing that voluntary climate agreements, such as the 1997 Kyoto Protocol and the 2015 Paris Climate Accord, are flawed because they encourage free-riding while responsible nations bear the cost of implementing cleaner technologies. Mr. Nordhaus suggested a club for nations to boost climate action to address this issue. The economist claimed that this club would exempt its members from trade tariffs relating to climate change that will apply to non-members.

Olaf Scholz of Germany has been a steadfast advocate for the idea of an international climate club. For some time, he has been leading initiatives to persuade global leaders to form a group along these lines.

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The climate change havoc

When he presented a paper on the idea to the Cabinet as the Finance Minister under the previous Angela Merkel administration, Mr. Scholz first revealed his aspirations last year.

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¡°What is needed is implementation. But one thing is clear: it is not possible to tackle climate change successfully at the level of individual countries or of the EU. This is why we want to create an international climate club for everyone who is moving forward with ambitious climate goals. This open, collaborative club will set joint minimum standards, drive climate action that is internationally coordinated and ensure that climate action makes a country more competitive at the international level,¡± he told the cabinet, as cited by the Hindu.

He also suggested that the European Union establish a climate club to prevent trade conflicts brought on by green tariffs. Later, following his election as chancellor, Mr. Scholz declared Germany's intentions to use the G7 as the foundation of an international climate club at the World Economic Forum.

What will the climate club do?

According to the German government, the Paris Agreement seeks to limit global warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit). The climate club wants to support this goal. The adoption of the accord marked its seventh anniversary on Monday.

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According to the German government, the club will work to hasten the industrial transition to cleaner forms of energy and to further develop emission-reduction strategies. Dedicated emerging and developing nations that sign up for the club will get support to advance the transformation of their industries.

The International Energy Agency and the Organization for Economic Co-operation and Development will set up a "climate change secretariat" now that the forum has been launched, Scholz told reporters in Berlin.