G20 leaders in China fail to agree deadline to end fossil fuel subsidies

5 September 2016
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Today, hopes that this would be the year the G20 finally get serious on climate change were well and truly dashed, as the world’s most powerful countries failed to set an end date for fossil fuel subsidies.

Instead, they issued yet another cut and paste communiqué, reaffirming for the eighth time in as many years their ‘medium term commitment to rationalise and phase out inefficient fossil fuel subsidies’.

These 20 countries – the richest in the world, pocketing 80% of the world’s GDP – have the greatest capacity to act on climate change. They are also responsible for 75% of global greenhouse gas emissions, and must lead by example.

So, what’s the hold up?

There are different views within the G20 about how fast to move on phasing out subsidies. The G7, EU and Mexico have been leading the charge for a 2025 deadline, while a handful of countries have sought to block the move.

This year, however, the world’s biggest polluters China and the US did engage in a peer review process for the first time, feeding back on each other’s fossil fuel subsidies. If ever made public, this may provide a small step towards greater transparency, but in the context of the radical pace of change needed to decarbonise our energy systems, it is no more than a token gesture.

Fossil fuel subsidies incompatible with climate commitments

According to a new study, current G20 climate pledges under the Paris Agreement fall way short of what is needed. In fact, they need a six-fold increase in emission cuts up to 2030 – sticking to their current plans will almost certainly push the world beyond the two degree limit.

Although fossil fuel subsidies were noticeably absent in the Paris deal due to political sensitivities, a first step – and a quick and easy win – would be to stop handing out public money and tax breaks to big business to search for, dig up and produce yet more oil, coal, and gas. Yet on average, the G20 continues to spend $444 billion a year supporting fossil fuel production alone.

After ratifying the Paris Agreement, all governments must put all decisions through a simple climate test; does this policy fit within our carbon budget according to the latest climate science? As three quarters of known fossil fuel reserves are ‘unburnable’ if the world is to stay within 2 degrees of warming, production subsidies would undoubtedly fail the test every time.

‘World’s dumbest policy’

Just last week Bloomberg said fossil fuel subsidies are the world's ‘dumbest policy,’ and leading insurers called for a 2020 deadline for phasing out ‘simply unsustainable’ subsidies in a statement targeting the G20.

Every month in 2016 has been the hottest on record, with NASA labelling the pace of this year’s warming as 'unprecedented' in the last one thousand years. Fossil fuel subsidies are moving from mere ‘policy contradictions,’ to become one of the most scandalous betrayals by a government of its people.

Excuses are running out – the time for action is now. The last chance for G20 countries to set an end date for fossil fuel subsidies will be at their summit in Germany in July 2017.

Failing to do so will lock yet another generation into a lifetime of dependency on centuries-old energy systems, putting a break on the transition to clean energy and passing the bill – and the climate fallout – onto far more vulnerable groups and countries.