Oil report

UPDATE 1-G20 agrees to phase out fossil fuel subsidies-draft

(adds details from statement, background)

PITTSBURGH, Sept 25 (Reuters) - The Group of 20 will agree to phase out subsidies on oil and other fossil fuels in the “medium term,” but will not set a firm timetable for the move aimed at combating global warming, a draft statement said.

The G20 will also intensify efforts to reach a U.N. deal on climate change later this year, said the draft communique obtained by Reuters at a G20 summit in Pittsburgh.

The leaders will ask their finance ministers to come up with a range of options for climate finance -- payments from rich countries to poor countries dealing with global warming -- at their next meeting.

The final version of the communique will be issued by the leaders at the end of their two-day meeting on Friday.

Governments in several G20 countries, including countries such as China, Russia and India, subsidize fuel such as coal and oil to keep prices artificially low for consumers, boosting demand for hydrocarbons and emissions from them.

Eliminating such subsidies would reduce greenhouse gases blamed for global warming by 10 percent in 2050, the draft said, citing data from the International Energy Agency and the Organization for Economic Cooperation and Development (OECD).

“Inefficient fossil fuel subsidies encourage wasteful consumption, distort markets, impede investment in clean energy sources and undermine efforts to deal with climate change,” said the statement from the G20, which groups major rich and emerging economies.

It said G20 energy and finance ministers would develop timeframes and strategies for implementing the phase-out and report back to leaders at the next G20 summit.

Agreement on the U.S. proposal is a victory for U.S. President Barack Obama, who is hosting the meeting in Pittsburgh.

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.

The G20 draft statement said leaders would “intensify our efforts” to reach a U.N. climate change agreement at the Copenhagen talks.

“We underscore anew our resolve to take strong action to address the threat of dangerous climate change,” it said.

It also called on big institutions such as the International Energy Agency and oil cartel OPEC to analyze the scope of energy subsidies and make suggestions at the next G20 summit for implementing the subsidy phase-out.

The group agreed to increase energy market transparency with regular reports on oil production, consumption, refining and stock levels.

Reporting by Jeff Mason and Darren Ennis, Editing by Frances Kerry