Earlier this month, G20 leaders meeting in St Petersburg, Russia decided to phase out the use of HFCs. This got a lot of attention (at least among green media), and rightfully so. However, another big decision made in St Petersburg seems to have bypassed most radars. The G20 leaders also agreed to phase out “inefficient” fossil fuel subsidies. Such a move would cut approximately $500 billion in annual governmental expenditures while also reducing greenhouse gas emissions (compared to business-as-usual emission projections) 10% by 2050.
Environment News Service, on the day of the meeting (September 20), wrote:
All the G-20 leaders agreed to phase out inefficient fossil fuel subsidies. Building on the commitment they made at the Pittsburgh G-20 Summit in 2009 to phase out these subsides, G-20 Leaders today agreed on the methodology for a new peer-review process of fossil fuel subsidies, an important step in combating climate change.
The International Energy Agency estimates that eliminating subsidies – which amount to more than $500 billion annually – would lead to a 10 percent reduction in greenhouse gas emissions below business-as-usual by 2050.
As part of the St. Petersburg Declaration released today at the close of the summit, the G-20 leaders stated, “We reaffirm our commitment to rationalise and phase out inefficient fossil fuel subsidies that encourage wasteful consumption over the medium term while being conscious of necessity to provide targeted support for the poorest.”
“We welcome the development of a methodology for a voluntary peer review process and the initiation of country-owned peer reviews and we encourage broad voluntary participation in reviews as a valuable means of enhanced transparency and accountability. We ask Finance Ministers to report back by the next Summit on outcomes from the first rounds of voluntary peer reviews. Recognising the importance of providing those in need with essential energy services, we ask Finance Ministers to consider, in conjunction with the relevant international institutions, policy options for designing transitional policies including strengthening social safety nets to ensure access for the most vulnerable.”
Now, personally, I’d consider all fossil fuel subsidies to be inefficient, but I’m guessing that G20 leaders have some fossil fuel subsidies in mind that they would consider efficient. Otherwise, why the dubious language?
Also, I imagine they aren’t going to include externalities — even though they should — and I’m not seeing a timeline for the phaseout. I assume that isn’t yet set.
We’ll see what comes of all this, but it looks like a step in the right direction.