G20 countries spent $ 1.4 trillion to support fossil fuels last year | Latest News India - Hindustan Times
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G20 countries spent record $ 1.4 trillion to support fossil fuels last year; more than double of 2019

ByJayashree Nandi
Aug 23, 2023 03:34 PM IST

The report provides record financial support for fossil fuels“ by International Institute for Sustainable Development, was released on Wednesday

New Delhi: Ahead of the G20 Leaders’ Summit in September, a report has found that G20 member countries spent $1.4 trillion last year to support fossil fuels.

The authors of the report have recommended that the G20 this year agree to act on their climate commitments by eliminating all public financial flows to fossil fuels other than those necessary to provide energy access to the poorest. (REUTERS)
The authors of the report have recommended that the G20 this year agree to act on their climate commitments by eliminating all public financial flows to fossil fuels other than those necessary to provide energy access to the poorest. (REUTERS)

The report titled “Fanning the Flames: G20 provides record financial support for fossil fuels“ by International Institute for Sustainable Development (IISD), released on Wednesday found that G20 members spent $ 1.4 trillion public money to support fossil fuels -- more than double the pre-Covid-19 and pre-energy crisis spends, as recently as in 2019.

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The amount includes subsidies, investments by state-owned enterprises, and public financing.

The authors of the report have recommended that the G20 this year agree to act on their climate commitments by eliminating all public financial flows to fossil fuels other than those necessary to provide energy access to the poorest. The authors have also highlighted that as the G20 chair, India can confidently demonstrate global leadership in this area, having reduced its fossil fuel subsidies by 76% from 2014 to 2022 while significantly increasing support for clean energy.

“The boldest, fastest action should be from the G20’s highest per-capita income members, given their historical responsibility for emissions and higher emissions per unit of GDP. The G20 should incentivise consumers and investors to shift away from fossil fuels by setting minimum carbon taxation levels,” the report said.

Experts said that in 2009, G20 governments committed to phasing out and rationalizing inefficient fossil fuel subsidies in the medium term, but 14 years later, the countries spent a record amount of public money to support coal, oil, and gas. Moreover, the issue of fossil fuel subsidies is absent from this year’s G20 agenda ahead of the Delhi Summit in September.

“These figures are a stark reminder of the massive amounts of public money G20 governments continue to pour into fossil fuels despite the increasingly devastating impacts of climate change,” said Tara Laan, Senior Associate at IISD and the lead author of the study in a statement. “The G20 has the power and the responsibility to transform our fossil-based energy systems. It is crucial for the bloc to put fossil fuel subsidies on the Delhi Leaders’ Summit agenda and take meaningful actions to eliminate all public financial flows for coal, oil, and gas.”

The report also highlighted that the G20 nations could raise an additional $ 1 trillion per year by establishing a carbon tax floor of U$ 25–50 per tonne of carbon-dioxide emitted (tCO2e). These funds could help solve some of the most pressing global issues including climate commitments. Experts note that shifting less than a quarter of the $ 2.4 trillion generated from subsidy reform and carbon taxation could help close the wind and solar energy investment gap—$450 billion per year until 2030—to limit global temperature rise to 1.5 degrees C, with public support leveraging additional funds from private investors.

The largest category of consumption subsidies was “price support” last year, which is governments fixing retail fossil fuel prices below the international market price. Below market pricing was more common in G20 emerging economies. Even when fuels were sold above international market prices, G20 governments (mostly developed) provided large subsidies to reduce energy bills for transport fuels, electricity, and heating. Germany, France, and Italy alone provided $ 213 billion in fossil fuel crisis support in 2022, the report said.

“With fossil fuel companies gaining record profits amid the energy crisis last year, there is little incentive for them to change their business models in line with what’s needed to limit global warming. But governments have the power to push them in the right direction,” Laan added.

HT reported on July 29 that the G20 countries, which contribute 80% of global greenhouse gas (GHG) emissions, failed to reach an agreement on the most critical steps to tackle the climate crisis at ministerial talks.

Among the issues on which the countries were unable to put up a united front were scaling up renewable energy, phasing down unabated use of fossil fuel, doubling the global rate of improvement of energy efficiency, and ensuring greenhouse gas (GHG) emissions peak no later than 2025.

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