G20 Poured More than $1tn into Fossil Fuel Subsidies Despite Cop26 Pledges – Report

August 28, 2023

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by Ajit Niranjan (The Guardian) Public money still flowing into industry despite agreement to phase out ‘inefficient’ subsidies, thinktank says -- The G20 poured record levels of public money into fossil fuels last year despite having promised to reduce some of it, a report has found.

The amount of public money flowing into coal, oil and gas in 20 of the world’s biggest economies reached a record $1.4tn(£1.1tn) in 2022, according to the International Institute for Sustainable Development (IISD) thinktank, even though world leaders agreed to phase out “inefficient” fossil fuel subsidies at the Cop26 climate summit in Glasgow two years ago.

The report comes ahead of a meeting of G20 countries in Delhi next month that could set the tone for the next big climate conference, which takes place in the United Arab Emirates in November.

It is crucial that leaders put fossil fuel subsidies on the agenda, said Tara Laan, a senior associate with the IISD and lead author of the study. “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.”

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The report found G20 governments last year provided fossil fuels $1tn in subsidies, $322bn in investments by state-owned enterprises and $50bn in loans from public finance institutions.

The total amount was more than double what they had provided in 2019, the authors found.

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In February, a report from the International Energy Agency found the scale of fossil fuel subsidies in 2022 was a “worrying sign for energy transitions”, though it argued some of the measures could be defended as social or political necessities “given the hardship that full exposure to market-driven prices could have caused”.

In June, a report from the World Bank found that “by underpricing fossil fuels, governments not only incentivise overuse, but also perpetuate inefficient polluting technologies and entrench inequality”.

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The IISD found that by setting a higher carbon tax of $25-75 per ton of greenhouse gases, G20 governments could raise an extra $1tn a year.

To offset the costs to vulnerable people living in poverty, the authors recommended targeted welfare payments to those who need it most. They also recommended world leaders drop the qualifier “inefficient” from their promise to phase out fossil fuel subsidies, and instead name exceptional cases where they would be justified. READ MORE

REPORT -- Fanning the Flames: G20 provides record financial support for fossil fuels (Institute for Sustainable Development)

Global fossil fuel subsidies and costs hit record $7tn in 2022, IMF reports (Financial Times)

Report: Most Major Fossil Fuel Producers Falling Short of Climate Targets (Environment + Energy Leader)

G20 countries fail to reach agreement on cutting fossil fuels:Fossil fuel-producing members dispute goal of tripling renewable capacity by 2030 (The Guardian)

Fossil Fuels Consumption Subsidies 2022 (International Energy Agency)

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