‘Reckless’: G20 states subsidised fossil fuels by $3tn since 2015, says report

Support for coal, oil and gas remains high despite pledges to tackle climate crisis

The G20 countries have provided more than $3.3tn (£2.4tn) in subsidies for fossil fuels since the Paris climate agreement was sealed in 2015, a report shows, despite many committing to tackle the crisis.

This backing for coal, oil and gas is “​​reckless” in the face of the escalating climate emergency, according to the report’s authors, and urgent action is needed to phase out the support. The $3.3tn could have built solar plants equivalent to three times the US electricity grid, the report says.

The G20 countries account for nearly three-quarters of the global carbon emissions that drive global heating.

The report, by BloombergNEF and Bloomberg Philanthropies, focuses on three areas where immediate action is needed to limit global temperature rise to 1.5C: ending fossil fuel subsidies, putting a price on carbon emissions and making companies disclose the risks posed by climate change to their businesses.

The report says all 19 G20 member states continue to provide substantial financial support for fossil-fuel production and consumption – the EU bloc is the 20th member. Overall, subsidies fell by 2% a year from 2015 to reach $636bn in 2019, the latest data available.

But Australia increased its fossil fuel subsidies by 48% over the period, Canada’s support rose by 40% and that from the US by 37%. The UK’s subsidies fell by 18% over that time but still stood at $17bn in 2019, according to the report. The biggest subsidies came from China, Saudi Arabia, Russia and India, which together accounted for about half of all the subsidies.

Australia and US increased fossil fuel subsidies since 2015

The G20 agreed in 2009 to phase out “inefficient” fossil fuel subsidies but did not define inefficient and little progress had been made.

“On paper, global leaders and governments are recognising the urgency of the climate challenge and the G20 countries have all made ambitious commitments to scale down fossil fuel development and transition to a low-carbon economy,” said Antha Williams, the environment lead at Bloomberg Philanthropies.

“But, in reality, the action taken by these countries up until this point is a far cry from what is needed. As a host of climate emergencies intensify around the world, the continued development of fossil fuel infrastructure is nothing short of reckless. We need more than just words – we need action.”

The UN special climate envoy, Michael Bloomberg, the founder of Bloomberg Philanthropies, and the UN-backed Net-Zero Asset Owner Alliance (NZAOA), which represents more than $6.6tn of investments, both urged governments to act, before a meeting of G20 energy and climate ministers in Italy on Friday.

“New [commitments] and net-zero targets from some G20 countries are warmly welcome,” said Günther Thallinger, at the financial services firm Allianz and the chair of NZAOA. “However, pledges and targets alone will not be sufficient to change course.”

The report found that 60% of the fossil fuel subsidies went to the companies producing fossil fuels and 40% to cutting prices for energy consumers.

“This funding really encourages the potentially wasteful production and use of fossil fuels and can mean emission-intensive assets are funded today, thereby locking in their emissions for decades,” said Vicky Cuming at BloombergNEF and an author of the report.

“There’s evidence that [subsidies] disproportionately benefit wealthier consumers, rather than vulnerable groups,” she said. The gilets jaunes (yellow vests) protests in France in 2018 showed that cutting fuel subsidies was politically delicate, she said.

Experts say ensuring less well-off consumers are protected from such changes is crucial for policies to be successful.

The report also examined how G20 countries were putting a price on carbon pollution. It found that more than 80% of emissions were covered by such prices in France, Germany and South Africa.

In the UK, 31% of emissions are covered but the UK has one of highest carbon prices at $58 per tonne of CO2. Just 8% of US emissions are covered and at the low price of $6 per tonne. Russia, Brazil, and India do not have any carbon prices.

The report says making companies disclose the risks the climate crisis poses to their businesses is critical to enabling financial markets to push capital away from polluting sectors and into green ones. But only the UK and EU have said they will enforce such a policy.

A recent report by the International Institute for Sustainable Development concluded that reforming fossil fuel subsidies aimed at consumers in 32 countries could reduce CO2 emissions by 5.5bn tonnes by 2030, equivalent to the annual emissions of about 1,000 coal-fired power plants. It said these changes would also save governments nearly $3tn by 2030.

In June, more than 500 organisations called on US policymakers to eliminate fossil fuel subsidies from the US tax code. “It is past time to remove the burden of dirty energy support from the public and instead turn the efforts of the government to supporting clean energy and the jobs it generates,” the letter says.

Contributor

Damian Carrington Environment editor

The GuardianTramp

Related Content

Article image
Global alliance for phasing out coal not fit for purpose, says NGO
Powering Past Coal Alliance accused of failing to follow up on pledges as many countries expand use of coal

Fiona Harvey Environment correspondent

27, Apr, 2021 @8:53 AM

Article image
Almost half of thermal coal firms set to defy climate pledge – report
Report identifies 935 firms finance industry needs to blacklist to meet Paris goals

Jillian Ambrose Energy correspondent

12, Nov, 2020 @8:01 AM

Article image
US clean power plan setback 'will not affect Paris climate change deal'
Politicians, businesses and campaigners from other countries rally to support Barack Obama after supreme court puts US flagship climate plan on hold

Fiona Harvey and Suzanne Goldenberg

10, Feb, 2016 @5:27 PM

Article image
Revealed: northern Australia's fossil fuel plans push climate goals beyond reach
Analysis uncovers impact of proposed coal and gas expansion on Paris agreement

Adam Morton

09, Oct, 2019 @11:00 AM

Article image
Biden’s pledge to slash US emissions turns spotlight on China
World leaders will be unable to halt climate breakdown without strong action from biggest emitter

Fiona Harvey Environment correspondent

23, Apr, 2021 @5:31 PM

Article image
Can Poland wean itself off coal?
Climate experts say the renaissance can be stopped but change must happen now – and the main obstacle is at the top

Jonathan Watts in Katowice

14, Dec, 2018 @1:21 PM

Article image
Fossil fuel companies risk wasting $2tn of investors' money, study says
Paris climate deal could render oil, gas and coal projects worthless with US, Canada, China and Australia most vulnerable to losing billions

Damian Carrington

25, Nov, 2015 @12:01 AM

Article image
UK banks’ support for coal industry has risen since 2015 Paris climate pact
Lenders including Barclays and HSBC provided services and loans worth £21.9bn in 2019

Jasper Jolly and Kalyeena Makortoff

03, May, 2021 @11:01 PM

How the G20 subsidises exploration for fossil fuel – interactive
Governments from G20 countries are spending $88bn to find new oil, gas and coal reserves – we have mapped where 10 of them are directing their funds

Paddy Allen

11, Nov, 2014 @12:01 AM

Article image
World Bank says Paris climate goals at risk from new coal schemes
Jim Yong Kim says slowing down growth in coal-fired power stations is essential in order to reduce emissions

Larry Elliott in Washington

09, Oct, 2016 @11:43 AM