G20 eyes fuel subsidy phase-out, minus dates: officials

By Jeff Mason and Lin Noeuihed

PITTSBURGH (Reuters) - Group of 20 leaders are nearing agreement on phasing out subsidies for fossil fuels in an effort to curb global warming, though no fixed dates have been set for the change, G20 officials said on Thursday.

Governments in several G20 countries subsidize fuel such as coal and oil to keep prices artificially low for consumers, boosting demand for hydrocarbons and emissions from them. Some estimates put annual worldwide spending on such subsidies at around $300 billion.

The United States, which is hosting the G20 meeting in Pittsburgh, has pressed for developing nations such as China, India and Russia to cut those subsidies in an effort to fight climate change.

"We're seeing a lot of support for that proposal and we think this will have a dramatic impact on our collective effort to reduce carbon emissions," U.S. Treasury Secretary Timothy Geithner told reporters at the summit on Thursday.

G20 officials said leaders were leaning toward leaving the timetable open, saying the moves should be made in the "mid-term" and tasking ministers to define a specific deadline and report back.

The G20 groups major rich and emerging economies.

The proposal focuses on consumer and producer subsidies, a U.S. official said. Consumer subsidies were especially high, he noted, with some countries spending as much as 5 percent or more of GDP to keep diesel and other fuel prices low.

WIN FOR OBAMA

Agreement on the proposal would be a victory for U.S. President Barack Obama, who is hosting the G20 meeting. Obama's ability to produce results on climate change has been called into question as prospects dim that a bill to reduce emissions will be passed in the U.S. Senate before U.N. climate talks in December.

An Indian official said his country wanted to eliminate subsidies over time but noted that prices there were high in the context of India's economy.

"It is important to India to try to remove, if there are distortions in terms of energy pricing, it is in our own interests to try to remove those distortions," said Shyam Saran, India's special envoy for climate change.

"We also have to take into account that there are very large sections of our population whose energy requirements will also have to be met. Therefore, while we are taking this policy forward, we have to (be) sensitive to the requirements of that section of our population," he said.

Obama aide Michael Froman said on Wednesday that phasing out fossil fuel subsidies worldwide could cut greenhouse gases by up to 12 percent by 2050, citing estimates by the Organization for Economic Cooperation and Development and the International Energy Agency.

The U.S. official said the United States would follow the cuts as well and emphasized that Obama had proposed to get rid of all oil and gas subsidies in his 2010 budget.

(Additional reporting by G20 reporters; Editing by Chizu Nomiyama and Frances Kerry)