Leaders of leading industrial nations at the German-hosted G7 summit announced plans to establish a “Climate Club” by the end of this year, aimed at coordinating efforts on climate action, with a particular focus on industrial decarbonization. The new initiative will help address the risk of carbon leakage, a situation in which companies move production of emissions intensive goods to countries with less stringent environmental and climate policies.

Carbon leakage has been a focus for EU countries, with member states in March announcing an agreement to impose a carbon tax on imported products in order to help tackle the issue. The G7 initiative would extend efforts to counter carbon leakage to the international level, the statement making reference to implementing tools such as “explicit carbon pricing, other carbon mitigation approaches and carbon intensities.” Key focus areas for the Climate Club include setting ambitious climate mitigation policies, coordinating efforts to help transform industries to accelerate decarbonization and boosting international climate action through partnerships, including the promotion of a just energy transition with initiatives to support developing countries in the decarbonization of their energy and industrial sectors.

Source: ESGToday