It’s time for rich countries to stop wasting money on fossil fuels
For almost a decade, the world’s most powerful economies have been making promises to stop channeling public money for fossil fuels that pollute our air and drive dangerous climate change, with little impact so far. This weekend’s G7 meeting in Canada is an opportunity to move from words to action.
Expect intense discussions on a wide range of contentious subjects as the G7 meeting opens tomorrow in Canada. The US is at the center of many disputes on trade policy, its relationship with North Korea, its recent decision to withdraw from the Iran nuclear deal, and its continued disdain for climate policies. Nevertheless, leaders will need to pursue work on climate policies, of which phasing out fossil fuel subsidies should be amongst the top priorities.
Pollution subsidies for the rich far exceed climate support for the poor
Since 2009, G7 countries have committed themselves to phase out fossil fuel subsidies, in an effort to transition their economies to more sustainable power sources. However, despite some positive developments, the overall picture remains bleak.
As a recent report from the Overseas Development Institute (ODI) shows, G7 countries continued to hand out money to a tune of $100 billion a year for the production and consumption of fossil fuels. Ironically, this is the amount which, under the Paris Agreement, developed countries worldwide have pledged to contribute annually towards supporting the transition of poor countries to a cleaner world. Currently, global contributions are still far from this target.
Canada, the host of this weekend’s meeting, last week disbursed CAN$4.5 billion to nationalise a pipeline in order to increase oil exports from tar sand exploitation in Alberta, one of the most inefficient ways of extracting oil but for which financing increased by 111% in 2017 alone.
Although the clean transition will require skillful political maneuvers, putting an end to the current generosity towards fossil fuel companies would be beneficial to all. There is no moral or economic justification for using public money to subsidise polluting fossil fuels when the livelihoods of hundreds of millions of people around the world are threatened by droughts, floods, and other natural catastrophes caused by climate change.
Putting a price on pollution AND subsidising it at the same time?
There is growing interest in carbon pricing amongst governments across the world, indicating increased awareness about the urgency to phase out fossil fuels.
It is therefore surprising that many of the same governments interested in carbon pricing are still handing out pollution subsidies which are the opposite of the polluter pays principle, undermining efforts to phase out fossil fuels. These handouts encourage more pollution, foster a fossil fuel lock-in and cost governments billions of euros.
Bar Germany, all European G7 countries have already announced their coal phase-out date. What the G7 needs to discuss on climate is precisely this: how and how fast to move away from supporting destructive activities.
As the summit closes, we can expect the delegations to once again reaffirm their commitment to phase out fossil fuels (with the exception of the US perhaps) but present talk on future actions is not enough anymore. Actions must be taken today, and with ambition, if we are to avoid the worsening of climate change impacts which are already starting to materialize throughout the world.