Oil Change International

Exposing the true costs of fossil fuels

Official government statements on fossil fuel subsidies

A variety of country groupings have called for the phase out of fossil fuel subsidies.  In all, leaders of 50 countries have committed to phasing out fossil fuel subsidies.  

Key statements include those from:

  • G20
  • APEC
  • Friends of Fossil Fuel Subsidy Reform
  • UN Secretary General’s High-Level Panel on Global Sustainability

Read below for statements from these groupings…

G20 Statements on Fossil Fuel Subsidies Phase Out

The G20 is a grouping of 20 of the largest economies in the world, including 19 countries plus the European Union.

Pittsburgh Leaders Statement, September 2009

Preamble

12. Today we agreed: …

24. To phase out and rationalize over the medium term inefficient fossil fuel subsidies while providing targeted support for the poorest. Inefficient fossil fuel subsidies encourage wasteful consumption, reduce our energy security, impede investment in clean energy sources and undermine efforts to deal with the threat of climate change.

Energy Security and Climate Change

29. Enhancing our energy efficiency can play an important, positive role in promoting energy security and fighting climate change. Inefficient fossil fuel subsidies encourage wasteful consumption, distort markets, impede investment in clean energy sources and undermine efforts to deal with climate change. The Organization for Economic Cooperation and Development (OECD) and the IEA have found that eliminating fossil fuel subsidies by 2020 would reduce global greenhouse gas emissions in 2050 by ten percent. Many countries are reducing fossil fuel subsidies while preventing adverse impact on the poorest. Building on these efforts and recognizing the challenges of populations suffering from energy poverty, we commit to:

  • Rationalize and phase out over the medium term inefficient fossil fuel subsidies that encourage wasteful consumption. As we do that, we recognize the importance of providing those in need with essential energy services, including through the use of targeted cash transfers and other appropriate mechanisms. This reform will not apply to our support for clean energy, renewables, and technologies that dramatically reduce greenhouse gas emissions. We will have our Energy and Finance Ministers, based on their national circumstances, develop implementation strategies and timeframes, and report back to Leaders at the next Summit. We ask the international financial institutions to offer support to countries in this process. We call on all nations to adopt policies that will phase out such subsidies worldwide.

30. We request relevant institutions, such as the IEA, OPEC, OECD, and World Bank, provide an analysis of the scope of energy subsidies and suggestions for the implementation of this initiative and report back at the next summit.

Toronto Leaders Statement, June 2010

42. We note with appreciation the report on energy subsidies from the International Energy Agency (IEA), Organization of the Petroleum Exporting Countries (OPEC), OECD and World Bank. We welcome the work of Finance and Energy Ministers in delivering implementation strategies and timeframes, based on national circumstances, for the rationalization and phase out over the medium term of inefficient fossil fuel subsidies that encourage wasteful consumption, taking into account vulnerable groups and their development needs. We also encourage continued and full implementation of country-specific strategies and will continue to review progress towards this commitment at upcoming summits.

Seoul Leaders Statement, November 2010

13. To provide broader, forward-looking leadership in the post-crisis economy, we will also continue our work to prevent and tackle corruption through our Anti-Corruption Action Plan; rationalize and  phase-out over the medium term inefficient fossil fuel subsidies;mitigate excessive fossil fuel price volatility; safeguard the global marine environment; and combat the challenges of global climate change.

Cannes Leaders Statement, November 2011

57. We reaffirm our commitment to rationalise and phase-out over the medium term inefficient fossil fuel subsidies that encourage wasteful consumption, while providing targeted support for the poorest. We welcome the  country progress reports on implementing strategies for rationalizing and phasing out inefficient fossil fuel subsidies, as well as the joint report from the IEA, OPEC, OECD and the World Bank on fossil fuels and other energy support measures. We ask our Finance Ministers and other relevant officials to press ahead with reforms and report back next year.

 

APEC (Asia-Pacific Economic Cooperation)

APEC is an economic forum of 21 countries in the Asia-Pacific region, focused on cooperating around economic and trade issues.

Leaders Statement, November 2010

We will rationalize and phase out inefficient fossil fuel subsidies that encourage wasteful consumption, while recognizing the importance of providing those in need with essential energy services, and review progress toward this goal on a voluntary basis.

 

UN Secretary General’s High-Level Panel on Global Sustainability

Launched in August 2010 by the UN Secretary General, the High-level Panel on Global Sustainability (GSP) includes more than 20 renowned world figures focused on developing a new blueprint for global sustainable development.

“Resilient People, Resilient Planet: A Future Worth Choosing” (Report of the GSP, January 2012)

With Governments everywhere under increased pressure to reduce public expenditure, an unprecedented political opportunity exists to reduce or eliminate perverse subsidies that fail to reflect the economic value of natural and social resources.

2. Reduction of Inefficient Subsidies

151. In most countries, incomplete pricing of externalities is exacerbated by the tendency of Governments to subsidize sectors of the economy which create negative externalities. Three of the most heavily subsidized sectors in the world are agriculture, energy and fisheries. In 2009, Governments around the world spent an estimated $312 billion subsidizing fossil fuel consumption and an additional $100 billion subsidizing fossil fuel production. In the same year, OECD countries alone spent $384 billion subsidizing agricultural production and consumption.

152. These subsidies are not merely expensive; they also distort trade markets, harm the environment, increase greenhouse gas emissions and slow poverty alleviation. According to the international energy agency, only 8 per cent of fossil fuel consumption subsidies in 2010 reached the poorest 20 per cent of the population.

153. While G-20 Governments have made some progress in acknowledging the cost of such subsidies, much more could be achieved with farther-reaching action. Reductions of fossil fuel subsidies would substantially reduce the price difference between renewable energy and more carbon-intensive energy sources. The international energy agency estimates that the effects of phasing out fossil fuel subsidies by 2020 would include:

  • A 5 per cent decline in global primary energy demand by 2020 — equivalent to the current energy consumption of Australia, Japan, New Zealand and the Republic of Korea combined;
  • A decline in global demand for oil of 6.5 million barrels per day by 2020, predominant in the transport sector — equivalent to approximately one third of current United States oil demand;
  • A carbon dioxide emissions reduction of 6.9 per cent (2.4 gigatonnes) by 2020 — equivalent to the current emissions of France, Germany, Italy, Spain and the United Kingdom of Great Britain and Northern Ireland combined.

154. With Governments everywhere under increased pressure to reduce public expenditure, an unprecedented political opportunity exists to reduce or eliminate perverse subsidies that fail to reflect the economic value of natural and social resources.

155. This needs to be done in a manner that does not penalize the poor, especially when the products or services concerned are basic essentials. Careful thought needs to be given to the sequencing of subsidy reduction: subsidies that the poor rely on least should be reduced first, accompanied by targeted support for the poorest and most vulnerable people where needed.

Recommendations For a Sustainable Economy

27. Governments should establish price signals that value sustainability to guide the consumption and investment decisions of households, businesses and the public sector. In particular, Governments could: …

g.  Address price signals that distort the consumption and investment decisions of households, businesses and the public sector and undermine sustainability values. Governments should move towards the transparent disclosure of all subsidies, and should identify and remove those subsidies which cause the greatest detriment to natural, environmental and social resources;

f. Phase out fossil fuel subsidies and reduce other perverse or trade-distorting subsidies by 2020. The reduction of subsidies must be accomplished in a manner that protects the poor and eases the transition for affected groups when the products or services concerned are essential.

 

The Friends of Fossil Fuel Subsidy Reform

The Friends of Fossil Fuel Subsidy Reform is a group of non-G20 countries that support the reform of inefficient fossil fuel subsidies.  Current members include Costa Rica, Denmark, Ethiopia, Finland, New Zealand, Norway, Sweden and Switzerland.

http://www.iisd.org/gsi/news/friends-fossil-fuel-subsidy-reform-supporting-g-20-and-apec-commitments

The Friends’ objective is to encourage the G-20 to reform subsidies and in particular to ensure:

  • Ambition: the level of ambition remains high; and,
  • Transparency: that this remains an important guiding principle for the G-20 process.

The Friends commend the G-20 on having made good progress so far, including the publication of G-20 country-specific lists of subsidies and phase-out strategies in July 2010, along with the Joint Report on fossil-fuel subsidies prepared for G-20 leaders by the IEA, OECD, OPEC and World Bank.

These actions contribute to the ambition and transparency of the G-20 initiative. Even so, the Friends believe that more remains to be done by the G-20 to ensure it meets the challenge it has set itself.

In particular, the Friends encourage the G-20 to demonstrate its continued commitment in future Summit Communiqués, including through sharing evidence of its progress towards rationalising and phasing-out inefficient fossil-fuel subsidies in its member countries. The Friends also encourage the G-20 to continue to rationalise and phase out inefficient subsidies for both the consumption and production of fossil fuels.