Three major insurers with more than $1.2 trillion in assets under management have urged G20 governments to commit to phasing out fossil fuel subsidies.
In a joint statement published by the Overseas Development Institute (ODI), major insurance companies Aviva, Aegon NV, and MS Amlin have urged governments to commit to phasing out fossil fuel subsidies by 2020 at the upcoming G20 leaders’ summit set to take place in September in Hangzhou, China.
“We — representing insurers with more than USD 1.2 trillion in assets under management, and other institutions and businesses — urge G20 governments to establish a deadline for the phase out of fossil fuel subsidies and public finance for fossil fuels at the 2016 G20 Summit,” the three insurance giants wrote in their joint letter (PDF). Specifically, the insurers want the G20 governments to set “a clear timeline for the full and equitable phase-out by all G20 members of all fossil fuel subsidies by 2020, starting with the elimination of all subsidies for fossil fuel exploration and coal production. In addition, they urge governments to set a similarly clear timeline for the phase-out of “domestic and international public finance for oil, gas, and coal production by 2020” and asks “all G20 members to be fully transparent from 2017 onwards about all fossil fuel subsidies in a consistent format that is publicly available on an annual basis.”
A lot has been said over the past two years about the shape and size of global fossil fuel subsidies. The International Monetary Fund last year concluded that we are subsidizing fossil fuels to the tune of $5.3 trillion each year. Another report published later in the year showed that G20 nations alone are spending $452 billion on fossil fuel subsidies each year. Cutting fossil fuel subsidies was shown last October to be able to reduce national emissions by an average of 11%. While another report published earlier this year revealed that if fossil fuel subsidies had not been in place during 2010, carbon emissions for that year would have been 46% lower than they actually were.
“Making a profit is essential in business,” explained Mark Wilson, CEO of insurance company Aviva. “But we will only be in business in the future if we act sustainably and create wider long term social value. That’s just good business — and not acting sustainably is very bad business indeed.”
“Climate change in particular represents the mother of all risks — to business and to society as a whole. And that risk is magnified by the way in which fossil fuel subsidies distort the energy market. These subsidies are simply unsustainable.
“We’re calling on governments to kick away these carbon crutches, reveal the true impact to society of fossil fuels and take into account the price we will pay in the future for relying on them. Energy subsidies should instead be used to create a sustainable future through the social, environmental and economic objectives set out in the UN Sustainable Development Goals.”
“These subsidies fuel dangerous climate change,” added Shelagh Whitley, the lead Research Fellow working on subsidies at ODI.
“If we are to have any chance of meeting the 2C target set at the Paris climate summit then governments need to start a programme of rapid decarbonisation.
“It is extremely worrying therefore that the G20 energy ministers earlier this year acted as if Paris hadn’t happened by repeating the same empty promises they have been making since 2009.
“The finance sector recognises the importance of moving away from fossil fuels, governments need to realise they may be the only ones left not moving.”