G-20 spent nearly $700 billion supporting fossil fuels in 2021
Countries comprising the ‘Group of 20’ (G20) intergovernmental forum continue to provide substantial financial backing for fossil-fuel production and consumption in 2021. This endangers the Paris Agreement’s pledges to limit greenhouse gas emissions. In 2021, the support given to the same reached its highest level since 2014.
These countries have provided nearly $700 billion in subsidies for coal, oil, gas and fossil-fuel industries in 2021, according to Climate Policy Factbook released November 1, 2022.
The factbook was released by BloombergNEF and Bloomberg Philanthropies.
This significant sum fuelled investments in emission-intensive equipment and infrastructures. It distorted fuel prices and promoted inefficient fossil fuel consumption and production, the report noted.
Fossil support spending increased by 16 per cent, according to the estimates. This surge was not just because of the economic recovery and increased energy consumption. It was sparked by the increase in support for fossil-fuel companies and utilities, the factbook underscored.
The factbook examined the advancements made by each G-20 country in three specific policy areas — phasing out fossil fuels, carbon pricing and disclosure of climate risks.
It comes less than a week ahead of the 27th Conference of Parties (COP27) to the United Nations Framework Convention on Climate Change. The conference will take place in Sharm el-Sheikh from November 6-18.
“Governments continue to subsidise fossil fuels — undermining the pledges they’ve made, harming public health, and shrinking our chances of avoiding the worst impacts of climate change,” said Michael R Bloomberg, UN Secretary-General’s Special Envoy on Climate Ambition.
We need to speed up the shift to clean energy and away from coal and other fossil fuel, Bloomberg added.
Coal’s share of G-20 fossil fuel support is gradually decreasing. It dropped to 2.9 per cent in 2021 from 4.1 per cent in 2016. However, the countries continued to invest $20 billion in coal in 2021.
This is surprising considering the attention given to coal in the campaigns to phase out greenhouse gas emissions. Recent G-20 conferences and COP26 have made pledges in this regard.
“The G-20 and G-7 governments have announced a range of seemingly more ambitious commitments to phase out fossil-fuel subsidies,” said Victoria Cuming, head of global policy at BloombergNEF and lead author of the factbook.
But they always seem to include imprecise language and caveats, giving governments wiggle room to interpret these pledges as they wish, she added.
China contributed the highest share (26 per cent) of fossil fuel support in 2020. However, it is significantly less than other G-20 members on a per capita basis — at $111. For instance, it is behind — Saudi Arabia ($1,433), Argentina ($734) and Canada ($512).
Canada more than doubled its support for fossil fuels for the same period. The US provided 57 per cent more such subsidies in 2020 compared to 2016.
A realistic carbon pricing must be implemented by G-20 members so that both companies and consumers can be held accountable for their greenhouse gas emissions. Only 12 members of the G-20 have national carbon pricing in place.
The threat that climate change poses to financial stability is being voiced by policymakers more strongly than ever. But only the European Union and the United Kingdom have passed laws or regulations requiring specific, countrywide disclosure of climate-risk information for investors.
Instead, most G-20 nations have merely implemented pilot programmes and released voluntary guidelines.
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