BARCELONA (Thomson Reuters Foundation) - After this week’s G20 summit in China failed to set a target year to phase out hundreds of billions of dollars in state subsidies for polluting fossil fuels, green groups and experts are urging Germany to finish the job as host of next year’s summit.
Ahead of the Sept. 4-5 meeting in Hangzhou, leaders of the world’s most powerful economies had faced growing pressure to declare a date to end the subsidies.
In June more than 200 civil society organizations called on the G20 to phase out fossil fuel subsidies by 2020, while insurers managing $1.2 trillion followed suit last month.
But despite a commitment by G7 nations in May to end government financial support for oil, gas and coal by 2025, the wider G20 group was unable to agree on a deadline.
Instead, the summit communique reaffirmed a commitment, first made in 2009, “to rationalize and phase-out inefficient fossil fuel subsidies that encourage wasteful consumption over the medium term, recognizing the need to support the poor”.
Subsidies from G20 governments to fossil fuel production alone - excluding subsidies to consumers - averaged $444 billion annually in 2013 and 2014, according to a report by Oil Change International and the London-based Overseas Development Institute (ODI).
“Time is running out. Every dollar wasted on fossil fuel subsidies pushes us closer to climate disaster and makes the transition to clean energy more difficult,” said Alex Doukas, a senior campaigner with Oil Change International.
“As more governments take the important step of ratifying the Paris Agreement on climate change, they must stop giving handouts to big polluters, which undermine the spirit and the letter of the Paris deal,” he said.
Right before the summit, China and the United States jointly announced they had ratified the Paris climate change agreement, a significant step for the world’s two biggest emitters of greenhouse gases. That is set to boost momentum for the deal to take effect early, perhaps as soon as this year.
But the broader G20 took a more cautious stance. It merely welcomed “efforts to enable the Paris Agreement to enter into force by the end of 2016” and looked forward “to its timely implementation”.
India was seen as blocking a more pro-active G20 stance on climate action. The Indian press reported comments by Indian officials that New Delhi would not be ready to ratify the Paris deal in 2016, nor was it prepared to agree to a U.S. proposal for a deadline to phase out fossil fuel subsidies.
An Indian negotiator told The Indian Express before the summit that India had already cut subsidies on petrol and diesel, which are “taxed significantly”.
“Subsidies on cooking gas for the poor and supply of free electricity to farmers cannot be done away with,” the negotiator told the newspaper.
Andrew Light, a senior fellow at the World Resources Institute and a former U.S. State Department climate adviser, said before the summit that the United States was seeking a 2021 phase-out deadline for the G20, but India appeared to favor 2031.
Groups working to drive forward climate action will now focus on lobbying behind the scenes and speaking out in public to push Germany to make a time limit for ending fossil fuel subsidies a priority at the G20 summit in July 2017, said ODI research fellow Shelagh Whitley.
“We see that Germany is a champion on climate, and that they may be able to take a stronger role than other G20 countries in ensuring that this happens,” she told the Thomson Reuters Foundation.
Whitley said more countries are acting to reduce subsidies, and becoming comfortable with the idea of setting a deadline.
Getting more businesses to join the call for a phase-out date would be important to build motivation for G20 governments to agree to one in Germany, she added.
Wendel Trio, director of the Climate Action Network (CAN) Europe, said that with the G20 presidency moving to Europe next year, the European Union should show leadership and “urgently reform its policies and tools that both directly and indirectly allow for financial support to the fossil fuel industry”.
Célia Gautier, policy advisor at CAN’s French arm, said France should join the United States, China, Germany and Mexico in agreeing to a peer review of its public support for fossil fuels, and phase out its subsidies by 2020.
The China and the United States were the first G20 countries to have their fossil fuel subsidies reviewed in a process chaired by the Organisation for Economic Co-operation and Development (OECD).
The reviews, made public this weekend, highlighted inefficient fossil fuel support policies that could be reformed.
OECD Secretary-General Angel Gurría described the reviews as “critically important”.
“Reforming policies that support the production or consumption of fossil fuels is a vital step in the global effort to substantially reduce emissions of carbon dioxide and other greenhouse gases,” he said on the sidelines of the Hangzhou summit.