A group of leading investors with a total of $2.8 trillion in assets under management have called on the governments of the G20 to end fossil fuel subsidies by 2020.
Specifically, the group of sixteen investors — which include names like Legal and General, Aegon Asset Management, and Aviva Investors — signed an open letter urging “G20 governments to establish a deadline for the phase out of fossil fuel subsidies and public finance for fossil fuels at the 2017 G20 Summit in Hamburg, Germany.”
As concerned investors, we were heartened by the G7 called for all governments to phase out fossil fuel subsidies by 2025. Last year also saw major milestones in the fight against climate change, notably the entry into force of the Paris Agreement, the focus on green finance by the G20, and the commitment by 48 of the most vulnerable countries to achieve 100% renewable energy by 2050.i We believe this momentum provides the G20 with a unique opportunity – and responsibility – to finally deliver on their repeated pledge to end fossil fuel subsidies.
Specifically, the investors called for the following statements to be made clear by governments at the July G20 Summit Meeting:
- Sets 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.
- Sets a clear timeline for the phase out of domestic and international public finance for oil, gas and coal production by 2020.
- Commits all G20 members to complete fossil fuel subsidy peer reviews by the end of 2018, building on the leadership of China and the United States in 2016.
Over the past few years there have been numerous reports outlining the crazy amounts of money being given over to fossil fuel subsidization. In November of 2015, a report published by the Overseas Development Institute and Oil Change Institute found that members of the G20 are providing $452 billion per year on fossil fuel production subsidies. A year later, the United States and China both published reviews of their current fossil fuel subsidy policies, showing that together, the countries are annually providing $20 billion for fossil fuel subsidies.
Further research launched earlier this week, again by the Overseas Development Institute, in conjunction with the Global Subsidies Initiative, found that ending subsidies to global fossil fuel production would be the equivalent of erasing the emissions from the entire global aviation sector.
“In line with the commitments already made by G20 governments, we need to see a clear plan to phase out subsidies to fossil fuels,” said Meryam Omi, Head of Sustainability and Responsible Investment Strategy at Legal and General. “The current level of inefficient subsidies and lack of transparency are jeopardising the global goal of meeting the Paris climate targets and of ensuring a secure, healthy and reliable energy system.
“As investors, we are faced with a tremendous opportunity to finance the low carbon transition and, as such, we look for the governments to set a clear timeline and a plan for phasing out fossil fuel subsidies to enable an orderly transition.”
“Global investors and insurers are sending a clear message to governments that burning public money through fossil fuel subsidies is not just bad for the planet, but bad economic policy too,” added Shelagh Whitley, Head of the Overseas Development Institute’s Climate and Energy research program. “G20 Ministers must heed investor voices, and ensure that the leaders of their countries commit to a firm deadline to end fossil fuel subsidies at the G20 Summit in Hamburg later this year.”