This is Dana Perkins and you're listening to Switched on the b and EF podcast. Earlier this year, BNAF released our twenty twenty three edition of the G twenty Policy Scoreboard. This is an annual report that evaluates and ranks different governments and their climate policies. But in a year of turmoil with conflict on the European continent which has led to soaring energy prices alongside global inflationary pressures, what has changed within the G twenty member states in regard to
their climate policies. Head of Global Policy at BNF, Victoria Cumming, has returned to the podcast today. She shares the countries that are at the top of the ranking, along with the biggest movers and those who fall near the bottom of the stack. She also highlights the impact the US
Inflation Reduction Act has had. During the conversation, we dig a little bit deeper on some specific technologies and industries, including those impacting the hard to abate sectors, as well as our newest area being assessed in this report, agriculture. If you like this podcast, make sure you subscribe to receive updates on future episodes. Bn EF subscribers can access the full G twenty policy Scoreboard report at BNF on the Bloomberg terminal at bf dot com, or on our
mobile app. If you'd like to join us for an upcoming summit taking place the day directly before the B twenty meetings, go to about dot BNF dot com forward Slash Summit and go to the tab titled New Deli Summit. Note that B and EF does not provide investment or strategy advice, and our full disclaimer can be found at the very end of the show. But right now I get to speak with Vicky about the G twenty policy scoreboard. Vicky, thank you so much for coming back to the show again today.
Thank you very much for having me.
So we're here to discuss the G twenty zero carbon policy scoreboard. That really rolls off the tongue, but I think that's because this is one of the media things that we do, is we really try and pull together what's happening across the G twenty in terms of the transition and the number of different things that are all simultaneously taking place. Before we get into the findings of this report, can you talk a little bit about what this is and really why we're doing it.
Absolutely so. Policy government policy specifically has been a key driver of the energy transition. We really wouldn't have the volume of wind and solar power, for example, that we have installed now if it had not been for feed and tariffs and tax credits and renewables auctions. So the overall aim of this policy scoreboard is to give a snapshot assessment of the G twenty countries in terms of
their decarbonization policies. And one of the reasons why it is such a MEATI report is because it covers the vast majority of the sectors across the economy. So we have power, fuels, transport, buildings, industry, waste, circular economy, and now also agriculture. And this is the third time that we've done this annual report, and so we're now also starting to be able to track progress or lack thereof in terms of the policies that governments have in place.
And you mentioned agriculture that was not on the report last year.
Correct, absolutely, yes, countries governments what we'll get more into it later are starting to look at how to decarbonize the agriculture sector, which is a particularly tricky sector to what we'd call hard to abate.
Before we get into agriculture specifically, let's talk a little bit about how we go about assessing countries and really ranking them in this report. So you have three different ways of going about looking at its robustness, presence, and effect Can you talk a little bit about what those three are designed to do?
Absolutely? So, first, I should say, somewhat confusingly, there are nineteen individual countries of the G twenty, the Group of twenty countries, and that is because the twentieth member of the G twenty is the European Union. So we assess the countries. Vast majority of them we look at just national level policy, but for the European Union member states France, Germany and Italy that are actually individual members of the G twenty, we also take account of EU level policy.
And then because of the US and Canada sub national policies are so important in terms of the energy transition we've seen, we also take account of state and province level policies when we're looking at those countries. So, as you say, we have these three types of metrics, so robustness, presence, and effectiveness. So each of the G twenty countries are assessed based on about one hundred or so metrics. And
then there are these three categories of metrics. So the first one is the presence, so what types of policies are in place in that country in these sectors, So for example, does it have a renewables feeding tariff, does it have purchase subsidies for electric vehicles, does it a carbon price on industrial emissions. Then we get into the biggest slice of the pie, I would say, is the robustness metrics. So those are our BNFS qualitative assessment of
the policies that are in place. So we look at the kind of impact of the policies, whether it's having as an intended impact. We also look at the policy making process, so is it transparent, does it, for example, allow stakeholder consultation, does the government announce some changes to the policies, to the kind of stability of the policy process. And then the last bucket is quantitative metrics that try to assess where the policies are actually having the desired effect.
So we look out, for example, whether a country has increased the share of renewable power generation, has it actually increased electric vehicle sales, has it decreased building sector emissions in recent history? So all those metrics come together, and so we have sector level scores and then we have an overall score for each country.
Can we talk a little bit about the time horizon with which we look at these different scores, because when I think of effectiveness, I think that in some respects, there's what's happening right now, which is the result of policies that have been on the books for previous years, versus projected effectiveness of a policy in the future and what we think it may be designed to do and stimulate.
One might use the USIRA as an example of something where there's a lot of discussion around what's going to happen in the future as opposed to retrospective looking impacts. Where does effectiveness fall on that time horizon for US and is it looking backward or looking forward or both.
So we use the latest data that's available, and different types of data are available with different time horizons historically, so greenhouse gas emissions data takes a long time to collect and to do so on a consistent basis, So for some sector level emissions data, we're only looking at the most recent levels twenty nineteen. However, with other bits of data, especially the kind of data that we Bloomberg
any F track ourselves. So when we're looking at electric vehicle sales or renewable power generation, we're probably looking over the last twelve months. As you say, we are seeing the impact of the policies that have been in place
at least for a few years. We also though, because investors and developers they look ahead to what potential policies coming down the pipeline, So we have started to see some impact market level in terms of the effective nyfnessmetrics of policies like the Inflation Reduction Act, because for example, developers and investment in CCUS has started to creep up, and hydrogen started to creep up as well, So there is also there is also we take as much as
possible with the forward looking, but yes, to some extent, it's historical as well, just in terms of the effectiveness metrics, which contributes about a quarter of a country score.
And as you mentioned, it does take some time to get these greenhouse gases quantified and to be able to actually have data that we can work off of. So then question really comes down to, given this is the third time doing this, and we're doing this at roughly
a one year interval. How much the things really change from one year to the next in terms of the results across robustness, presence, and effect do you see I suppose if you are looking at policy changes, you're going to see a lot of change in presence from one year to the next, depending upon what a specific country
is doing. But given that effects are lagging and robustness may take some time to actually get under way in order to be able to assess that, do the numbers swing wildly in these rankings from one year to the next.
It's funny because, as you say, you would think that the kind of changes might be fairly minimal, at least on the effectiveness metrics, but actually we have seen the differences a year to year. So one of the reasons for that is we try not to use kind of absolute changes in absolute volumes of things. We assess a country relative to the global to average in some cases. In some cases we as OECD countries with the OCD average and non OCD with the non OECD average. But
there are significant changes even so. One of the metrics that's most likely to change year to year we've seen is actually in terms of electric vehicle sales and the share of electric vehicle sales out of all new vehicle cells.
Well, okay, so let's talk about changes. Let's talk about twenty twenty three report and what we're seeing. So one of the findings from the report is that Europe is essentially leading on some of these policies at the moment. So we're looking at what happened in twenty twenty two. That's what this report is looking to assess. Can you essentially give us a little bit of a punchline and which country or countries were the winners, Let's say, if you're looking at this as a ranking.
So in terms of who are the winners, the biggest climber, I would say was the US, which jumped up ten percentage points, which is a bigger increase than any other country by some measure. Result, it's now in fifth position out of the kind of overall G twenty rankings. That's the biggest change.
So againing is a form of winning.
Yes, yeah, but that's a win anyway. Yes, yeah. So you might look at this and think, well, yes, it's Europe at the top again this year, but actually, if you look at the details, so last year, Germany was the clear winner by about six percentage points over France, but France, because it's made improvements in various sectors, including the building sector and industry, it has actually closed that gap just to be one percentage point, So we could
see France overtake Germany next year, depending on how things go. The other change i'd flag in the top four is that the UK has fallen to fourth position and Italy
is now in third. For various reasons. The UK tends to be pretty good in terms of the policy presence of the number of policies it has in place, but it also tends to fall down on the robustness because the government has a history of announcing support and then suddenly announcing changes to that support, generally right reducing it or scrapping it entirely.
Not to name and shame, but who fell the most And I guess who's now at the bottom that you're not expecting to well, maybe weren't expecting to see there in the past.
So we saw a few countries fall a down the ranking. I guess if you're looking generally at the non winners, we'll call them for it to be politically.
Correct, nineteen countries.
It's not a big surprise that say Russia, Saudi Arabia, Turkey are at the bottom. They especially compared with say Europe and now the US. They have very little policy support in place. They also tend to fall down in terms of having less than transparent and stable policy making processes, and they are also running behind in terms of the effectiveness metrics of things like the share of renewable power generation. They tend to be still heavily reliant on fossil fuels.
A few countries have kind of fallen slightly in terms of their score. One is India. This has been in various sectors. Various policies have been subsidies have been reduced or withdrawn. Still well behind say other G twenty countries, even in the Asia Pacific region on electric vehicle sales, so kind of progress. Outside the power sector, it has very little industrial decarbonization policy in place, and it has little sustainable agriculture policy.
Given that India is hosting the G twenty this year, do you think zero carbon policy is actually going to feature in those talks, especially given where they seem to be falling in terms of it is a priority versus some of the other countries that are actually involved.
So I think climate change is definitely on the agenda for the G twenty and the B twenty this year, I think the focus will likely be on clean power, and all due to India. So that each country's in this score board, their total score is weighted by the share of the greenhouse gas emissions in their economy, so
actually power sector emissions. The power sector accounts for a large share of emissions in India, so it's not unreasonable for them to be focusing on clean power to start with, and they've also got some very ambitious policies on clean power and elsewhere on things like biofuels and increasingly on
electric vehicles. But I would imagine that they would be focusing on say the power and possibly transport sector these two twenty talks, and possibly also there's increasing interest I think in India and Asia more generally in terms of the carbon markets, so we could also see interest in that.
So we might even see with the hosting this year, potentially them increasing in the rankings, and maybe we'll see some changes next year in terms of rising and falling on this list, much like the US has this year.
The difference between I think the US and India is that in terms of clean power in deal already has both at national and kind of subnational level, various clean power policies, both to promote renewable energy and increasingly for energy storage as well. I would be surprised if they announce and therefore implement around the G twenty more policies that push them up the ranking to the extent that we've seen in the US this year.
So if we think about this ranking and this kind of unique additional country that isn't a country added here, which is the European Union, where does the EU fall in all of this? Given that there's a number of member states of the European Union that actually rank quite highly, so I'd imagine it does bring up their average, But yeah, where did they fall?
So, as you say EU policy, Without EU policy, Germany, France and Italy would not necessarily be the at top of the ranking, or at least their score would be
significantly reduced. So one of the reasons is that is that in the school Board methodology, a country gets more points if policies are policy sticks, So if that means they're regulations or mandates that kind of force changed compared with say a financial or fiscal incentive that incentivizes and seeks to encourage change, and a lot of the EU level policy that we take account for France, Germany and
Italy are those policy sticks. So things like the EU emissions trading system, things like mandates around energy efficiency, performance of buildings, all those, and various things around kind of the use of fertilizers and pesticides in the agriculture sector. So I think if the EU was considered an individual country, it would likely be at the top.
Let's get into some specific technologies. Let's start off with agriculture, which is the newest entrant to our scoreboard. Now, what percentage of global emissions does agriculture actually represent?
So agriculture that's excluding land use and forestry is around twelve percent globally according to the kind of latest twenty nineteen data. But that's share really varies across countries. So you have countries, for example, in the G twenty five, Saudi Arabia is just one percent of their national emissions, whereas Brazil it's forty eight percent. So agriculture sector it kind of represents a kind of widely different challenge depending on which country you're looking at.
When given that it's such a different challenge. Are you seeing with countries that oftentimes, if there are really robust policies in place and they're doing well on the scoreboard across let's say, the power sector, that they're also doing well in agriculture or can it sometimes be an outlier.
That's a really interesting question. So we found that the G twenty countries fell into three buckets. So there was one bucket which includes, for example, the European countries and the US, where they generally had a relatively good set of decarbonization policies in the agriculture sector, as well as all the other sectors that are covered by the policy scoreboard.
But there were three countries, so Australia, Brazil and Argentina that scored particularly highly in the agriculture sector compared with the other sector, which is really interesting, I mean, and I think one of the reasons is that because agriculture actually accounts for a sizable share of their economies and their for greenhouse gas emissions. And then the final bucket were five countries that didn't perform well in agriculture or indeed across the other sectors.
Of the different categories that exist, are some of these weighted more heavily, let's say, because of their percentage of
greenhouse gases. So when you're looking at this overall score, is agriculture and industry for example, are they weighted evenly or is there a way that we kind of look at the policies in light of what they're actually affecting in terms of the industry that they're attacking, or is it overall we're looking at the greenhouse gas impact and it doesn't matter where it's coming from.
So a country's total score is weighted by each sector's share of national emissions. So, taking examples we've just looked at before, Saudi Arabia did not score that well on agriculture policies, but that didn't matter so much for its overall school because it was only agriculture is only one percent of its total emissions, whereas for Brazil, it's agriculture school actually accounted for half of its total school.
Okay, well, then let's go now to a technology that really is designed in many respects to attack some of the hardest to abate, the most difficult things to decarbonize. So we're looking at hydrogen now, hydrogen ccus so carbon capture utilization, storage and biofuels were all put together, but one could argue actually that all three of those have the same ultimate end use in that they're designed to
tackle hard to abate. What percentage of emissions does this actually represent and kind of how has this area weighed, and then who are the winners in this category?
So in terms of the waiting, it's a tricky ones for this actual category. So we look at fugitive emissions and other fuel combustion that isn't associated with another sector.
In terms of how countries have so, the US has always tended to score fairly highly, especially and this is pre Inflation Reduction Act, especially compared with its other sectors, because it has had historically good at tax credits for CCUS and also policies for biofuels, And this year we saw it actually rise to the top of the ranking for this kind of low carbon fuels and CCUS sector
that we count together. Then Canada also improved the number and quality of policies that are in place for these technologies, so it also climbed to third place this year. And then Germany has always been historically strong, especially when it comes to hydrogen and to letter extend, biofuels.
For those who listen to this show regularly, they'll have noticed that over the last few weeks the Inflation Reduction Act has come up a few times, and it has had a dramatic impact on a number of the different industries that we cover, both now and looking forward, certainly not just in the United States, but also with other countries reacting in kind with their on policy incentives. So
hydrogen is certainly at the center of that. There is a big conversation around hydrogen essentially maybe not to use too big of a word, but booming in the US at the moment. Is this what we're seeing right now
in terms of this ranking? Are we already seeing the US make great strides in terms of how well I guess all three of the different areas that we look at, the presence, robustness, and effectiveness of policies around the hydrogen space in the US specifically as a result of the Inflation Reduction Act.
So I think without the Inflation Reduction Act, although IRA, the US would not have increased its score to the extent it has this year. So in some sectors or for some technologies, it's introduced new policies. So for example, the hydrogen tax credit, and in that case, so the US has gone up in terms of its presence metrics.
But even for technologies like CCUS, where the US did have of some kind of federal mechanisms already in place to incentivize them, the IRA, because of its generosity and the improved design of these policies, we have increased our
robustness evalue relation of the US. So to take hydrogen specifically, it has likely the best low carbon hydrogen policy in place around the world, and certainly from the G twenty perspective, and we should see in future iterations of the Policy Scoreboard report that this then gets reflected in terms of
the effectiveness metrics as well. One thing I would flag and question that I have got is why has the US not actually surpassed some of the European countries that are top of the school board this year and for that week talk again about the policy carrots versus policy sticks.
So the policy carrots, like the tax credits within the IRA, while they can be very well designed and generous, they can only encourage change, whereas European countries, so the former and the current the European Union countries they have in place many more of these policy sticks that force changed, so things like carbon pricing, mandates on energy efficiency improvements, use of certain fuels, fossil fuel phase outs in the
power and increasingly building heat sectors, and in various environmental regulations in agriculture sector. So that is why they retain the top spots for this year anyway.
Well, so let's talk about another area where the US has actually done quite well in this ranking, and that has to do with industry. And for the uninitiated, will you also define how we're looking at industry because we separate out buildings in industry, which often are grouped together.
So when we talk about buildings, we're looking specifically at the technologies needed to predominantly to heat buildings, so it tends to be gas boilers or it could be increasingly heat pumps. When we're looking at industry, we're looking at the kind of heavy industry manufacturer ring, steel, cement, petrochemicals. So those are the technologies that are needed to produce industrial heat for those processes.
So in some respects, the same technologies that the CCUS hydrogen biole fuels are looking to provide part of the solution for.
Absolutely So when we are looking specifically at the scores for low carbon fuels and CCUS. We're focusing on the incentives for the production the development of those technologies, Whereas when we're assessing a country's industry policies, we're focusing on policies to incentivize the use of those low carbon technologies in industry. So, for example, a government could require that a certain amount of steel that's produced must come from
green technologies. One thing you could say, and would be useful to flag here, I think, is that while there's seen some progress in terms of industry policies, there's still really lags behind, say power and transport, where.
A lot of the technologies are really more readily available. So it's a conversation around scale as opposed to R and D and development.
Yeah, it's the technologies for power and for transport, those are fully commercialized technologies now and it's mass scale out is the next challenge or the current challenge. Whereas with buildings and certainly for industry and for agriculture. Yeah, it's a question of jumping that commercialization gap.
Now. There are different ways to cut all of this up. So you mentioned we have the G twenty and we've looked at on an individual country basis, but then the EU counts as a country. What are some of the other ways that we've assessed in this report kind of groupings of countries. Because you've got the G twenty, you've got the G seven, you've got other different trading blocks.
How are we assessing these against one another? And what are some of the findings whence you start looking at the world that way.
So if we're looking at different groupings of countries specifically, there's definitely a gap between what's referred to as developed versus developing economies. So members of the OECD that we're in the G twenty DA had an average score about sixty four percent this year, whereas non OECD members had
an average of thirty six percent, so significantly lower. And I think there are several reasons for that, many of them economics driven in that to a certain extent, China accepted OECD countries were at the forefront of starting to kind of introduce renewable energy and to lesser saying, electric vehicles and really promote the scale up of those technologies.
And that dichotomy between the OECD and non OECD countries and that gap that you just pointed out, which I think in many respects really gets to the heart of what we've seen some of the recent conversations around decarbonization at COP meetings. Now we have COP coming up this year, as we do most years, do these conversations at the G twenty oftentimes reflect or even said as a precursor to the way things actually start to play out at a COP.
Yes, I think that both the discussions at G twenty we've got coming up in India in September, but also the G seven discussions that we had a few weeks ago in Japan, they can they often signal what topics are going to be under debate at COP twenty eight this year at the end of the year, and we
also could see some of the participant's priorities. So I think at the G seven summit most recently, climate finance will once again be top of the agenda for COP twenty eight, and interestingly so the G seven countries are Canada, France, Germany, Italy, the US, the UK and Japan, and they have in their kind of statement that they released said that they want to deliver on the target to produce one hundred billion dollars a year of climate finance for developing countries
in twenty twenty three, that maybe three years after they were due to actually deliver. The original deadline announced in twenty and nine was twenty twenty, but in Glasgow, when it was clear that they were not going to achieve that twenty to twenty deadline, the overall countries agreed that they would deliver by twenty twenty five, which I think
disappointed a lot of developing economies. One of the things note about the climate negotiations is that climate finance and the delivery of it from richer nations is a bargaining tool in order to incentivize emerging economies to commit to more ambitious climate pledges. The thing about these emerging economies is that as there are emerging, they're seeing significant increase in terms of economic growth and therefore also GHG emissions.
So it is crucial for achieving, say the Paris Agreement goals limiting global warming to one point five or two degrees, that these large economies commit to more ambitious emission reduction targets.
So if we're really thinking about having the most meaningful impact on emissions, you invariably have cop center stage with climate and emissions, and that is the point of the meeting? Where is the G twenty meeting have a number of different directions that they may go in. Really, though, when we're looking at maybe some of the heaviest emitters, which we may argue are also in the G twenty, where do you think some of the most meaningful change can
actually happen? And I guess the question really is, Vicky, which is your favorite meeting and where do you think the most ground is being made in terms of climate?
Oh? Wow? Can I if we're talking about in terms of climate? Can I choose neither of them? I think that in theory, with fewer players in the room, the G twenty process can be more efficient, it can result in more concrete initiatives, and with fewer players hopefully stand
a greater chance of implementation. That hasn't necessarily sn't been shown to be the case in recent history, but there have been some things, for example, the Just Energy Transition Partnerships, which were also kind of announced and highlighted a COP. I think the thing is with COP because it evolves the vast majority of countries in the world, and where each country has one vote to regardless of how big
or how much political clout it has. It gives a chance for some of the smaller countries, especially those say small island states that are most exposed to climate change, gives them a voice at least at international level. But in terms of kind of efficiency, I would suggest that the G twenty is better.
So it's certainly important that we contextualize what's happening globally from country to country and region to region, and is a big reason why we end up writing research like this across all the different policy teams that we have, and really why you have a role as somebody who's looking at the international policy landscape as a whole. And I guess my main question is what do you want
people to take away from this year? Because as I mentioned at the very beginning of the show, this is a monster Over report and there is a lot of information in here, in a lot of different ways to go about ranking one against the other. So what was the thing that stood out most to you and what do you want the takeaway to be?
I think one of my key takeaways is that countries have made a certain amount of progress in terms of implementing policy to incentifize clean power and electric vehicles or clean transport. I think there is still a significant lack of policy support for locom technologies in other sectors, specifically buildings, industry,
and also now agriculture. So if we just look at the average score across the G twenty, the average power score was sixty one percent, fifty four percent for transport, but for the other sectors they had an average of forty seven and some of those, like industry, it was much lower. So my main takeaway is that if governments are listening to this, then that is where they need to start targeting their policy focus right now.
All right, thank you for joining us today, Vicky and sharing your thoughts regarding well, not just the D twenty and how they rank with each other, but also looking ahead towards some of the cop meetings.
Thank you very much for having me.
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