Richest Nations Fail to Agree on Deadline to Phase Out Fossil Fuel Subsidies

Energy ministers from the world’s major economies have failed to reach agreement on a deadline to phase out hundreds of billions of dollars in government subsidies for fossil fuels — subsidies that campaigners say are helping to propel the globe toward potentially devastating climate change.

Ministers from the Group of 20 major economies met in Beijing on Wednesday and Thursday, but failed to reach agreement on a deadline, despite Chinese and American efforts and a joint appeal from 200 nongovernmental organizations.

The Group of Seven richest economies last month urged all countries to eliminate “inefficient” fossil fuel subsidies by 2025.  At a separate annual meeting in June, the United States and China agreed to push for a firm target date to be set at a summit of G-20 leaders in Hangzhou in September.
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But energy ministers from the G-20 failed to reach agreement on a deadline this week.

“The communique repeats the importance of moving towards a subsidy reduction,” U.S. Energy Secretary Ernest Moniz told reporters in Beijing.  “But within the G-20 there are different views on how fast and how aggressive one can be on that.”
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A 2015 report by the British think tank Overseas Development Institute, along with Oil Change International, calculated that the G-20 major economies subsidize fossil fuel production to the tune of $444 billion a year, marrying “bad economics with potentially disastrous effects on the environment.”

Russia spends some $23 billion in annual subsidies, and the United States $20 billion — despite President Obama’s calls to end tax breaks on the fossil fuel industry, the report said. China spends $3 billion, while Britain is one of the few G-20 countries increasing fossil fuel subsidies and cutting back on investment in renewable energy.  Total G-20 subsidies for fossil fuels was four times the total global investment in renewable energy, it estimated.
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A promise to cut subsidies was first made at a G-20 meeting in Pittsburgh in 2009, but since then very little progress has been made — until the G7 finally set a target date last month, said Li Shuo, a climate energy campaigner at Greenpeace.
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Saudi Arabia has been the major blocker of a deal at the G-20, Li said, while the United States and China want to take advantage of low oil prices by making progress this year.
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Moniz said the Saudis had already lowered fuel subsidies as part of an economic restructuring package, and were promising a second phase of subsidy cuts.  “They are realizing, just as the other fuel producing countries are realizing, that promoting inefficient use of this valuable resource has to end,” he said.  “Now they have to look at how they are going to structure their safety net programs.”

But he played down expectations that a firm date for eliminating subsidies could be agreed.

“We think the middle of the next decade would be a good time, but it’s not going to be one magic date for everybody.”

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