G20 urged to switch fossil fuel subsidies for climate finance

Transfer public support for polluting products into green growth and protection from extreme weather, says CAN Europe

Oil refinery (Flickr/ PROZach Boumeester)

(Flickr/ Zach Boumeester)

By Alex Pashley

Campaigners are calling for European members of a forum of advanced economies to shift cash subsidising dirty fuels into climate finance.

CAN Europe urged France, Germany, Italy and the UK to “take responsibility for key components of climate action”.

That includes phasing out the billion-euro bumps the bloc gives fossil fuels, as G20 finance ministers gather in Ankara, Turkey, from Thursday.

The European Union shovelled €60 billion of public money into subsidies for coal, oil and gas in 2011, according to the OECD. Germany spent €5bn, the UK €4.2bn, France €2.7bn and Italy €2.1bn.

While for climate finance, member states directed just €9bn in 2013 by comparison, CAN said in a report.

“We need to reverse the financial flows; financial support for fossil fuels must be eliminated while finance for low-carbon solutions and climate adaptation must be dramatically increased,” said Wendel Trio, Europe director at the coalition of NGOs.

Industrialised economies have pledged to mobilise US$100 billion a year by 2020 to help poor countries go green and manage the impacts of climate change.

The EU needs to ramp up the €7.2bn it contributed in 2010-12 in climate finance to €24.3bn ($27bn) annually by 2020 – its “fair share” of that cash, the report said.

Report: G20 could determine if rich meet climate finance promise

Government subsidies make energy less costly for producers and consumers, resulting in more burning of fuels and higher emissions.

Europe has cut back on such tax breaks and direct support in recent years, though the role of export credit agencies bankrolling of dirty operations abroad has come in for criticism.

An IMF study in May, which took a broader definition of fossil fuel subsidy to include things like health costs of air pollution, totted it up to $5.3 trillion in 2015.

Eliminating that support would slash greenhouse gas emissions by 20%, the international body said.

November meet

Direct comparisons of subsidies with pledges of climate finance “opens up discussion about priorities” of governments, said Nick Mabey, head of think tank E3G.

This week’s meeting of finance ministers is a warm-up for the main G20 summit in November, two weeks before a crunch climate summit kicks off in Paris.

Subsidies will be high on the agenda for heads of state, despite being low down in official documents, Mabey said.

“It would surprise me if there wasn’t a push on it given oil prices are low, and the UAE and others have moved to roll back subsidies.”

Middle Eastern states have seized on the slumped price of oil to relieve budgets bloated by state handouts, which tend to benefit elites more than the poor designed to benefit. Morocco vowed to do the same in its submission to a UN deal.

G20 host Turkey, on the other hand, is expanding its coal-fired generation. Mabey said the country would prefer to talk up green infrastructure than draw flak on its resistance to subsidy phase-out.

Responsible for about 70% of global carbon emissions, two-thirds of the world’s population and 85% of GDP, the G20 is a weighty force.

But with members including coal-dependent China, South Africa and Australia, it is considered less effective in taking climate action than its bigger cousin, the G7.

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