G20 Faces Push for Firm Deadline on Fossil Subsidy Phase-Out

With green finance on the agenda, there are three steps G20 leaders meeting in Hangzhou, China can take to beef up their commitment to eliminate fossil fuel subsidies, writes climate analyst Amin Asadollahi in a post for the National Observer.

And Asadollahi, North American lead for climate mitigation at the International Institute for Sustainable Development, says Canada can play an international leadership role in making it happen.

G20 nations first promised to eliminate “inefficient” fossil subsidies when they met in Pittsburgh in 2009, but the qualifier has been an excuse for inaction. “There are no efficient fossil fuel subsidies in a world that needs to rapidly decarbonize, but some transitional measures may be necessary to ensure that the poor are not inadvertently impacted by higher energy prices,” Asadollahi writes. “The G20 may not come to an agreed definition of an ‘inefficient fossil fuel subsidy,’ but that shouldn’t stop the Government of Canada from clarifying what that means in the Canadian context.”

The second area of concern is that not all G20 countries have been fully transparent about their current fossil subsidies. While Mexico, China, and the United States have shared their subsidy inventories for international peer review—with the U.S. and China reporting the results of their joint review this weekend—Canada has not.

And finally, the G20 has never attached a timeline to its phase-out promise. “Fossil fuel subsidies are to be removed—but by when?” Asadollahi asks. “Earlier this year the G7, which includes Canada, pledged to end fossil fuel subsidies by 2025. They should now be urging the G20 to agree to a similar deadline.” Some climate and energy organizations, along with three global insurance companies, are urging a phase-out by 2020.

In an FAQ published ahead of the G20 summit, IISD places Canada’s annual fossil subsidies at C$3.3 billion per year, including $1.3 billion from the federal government and $1.16 billion from Alberta.

“There are better ways to allocate these funds. With $3.3 billion per year, it’s possible to pay for 16 million days of hospital stays,” Asadollahi writes in the Observer. “Or, those funds could provide job training for 330,000 workers—including the kind of retraining some oilsands workers are calling for to help them move over to renewable energy projects. It’s not far from the $5 billion that the Canadian government earmarked for immediate spending on green infrastructure spending in the 2016 federal budget.”

IISD notes that “Prime Minister Justin Trudeau and his government have promised to stop subsidizing fossil fuels in Canada—that was a clear and specific promise in their election platform. But the federal government’s latest budget actually locked in some fossil fuel subsidies for another 10 years.” The organization adds that, “in a world that’s shifting to cleaner sources of energy, those subsidies don’t make sense—especially when they work against the other actions we’re taking to fight climate change.”

Ahead of the G20 meeting, a briefing from Climate Action Network Europe charged that EU financial institutions are “out of sync with the Paris Agreement,” channeling billions of Euros in funding to fossil fuel projects. The tally includes more than €12 billion from the European Investment Bank and the European Bank for Reconstruction and Development between 2013 and 2015, and more than €1.6 billion from the Connecting Europe Facility and European Structural and Investment (ESI) funds between 2014 and 2020.

“The EU proudly stipulates that it has been a leading voice in advocating for strong climate action internationally. It has also pledged to phase out environmentally harmful subsidies, including fossil fuel subsidies, by 2020,” said CAN-E Finance and Subsidies Policy Coordinator Maeve McLynn.

“However, the briefing published today shows that the EU is way off track to achieve this goal, and that its public funding is out of sync with the Paris Agreement.”

Going into the summit, as well, India was set to oppose efforts to attach a firm date to a phase-out.

“We are cutting fossil fuel subsidies in India, and we have done quite a bit. Today, there are no subsidies on petrol and diesel,” an unnamed Indian negotiator told The Indian Express.

However, “subsidies on cooking gas for the poor and supply of free electricity (power being produced mostly from coal-fired thermal plants) to farmers cannot be done away with.”