Geneva, Switzerland – Fossil fuel subsidies need to be removed in order to pave the way for sustainable development, according to the Geneva-based Global Subsidies Initiative (GSI). The group has issued a series of reports on the eve of a meeting of G20 finance ministers in Washington, D.C.
The report, Untold Billions: Fossil-fuel subsidies, their impacts and the path to reform, provides research and analysis to support the commitment by the G20 and the Asia-Pacific Economic Cooperation forum to phase out inefficient fossil fuel subsidies.
“This will be easier said than done,” said David Runnalls, president of the International Institute for Sustainable Development, which developed the GSI. “The issue of fossil fuel subsidies drives right to the heart of climate change and sustainable development and must be addressed urgently. The G20 should be commended for their early leadership, but they can’t afford to let that leadership lag.”
In recent decades, many countries have attempted to remove government support for the production or consumption of fossil fuels, with varying degrees of success. Jose Marie Figueres, former president of Costa Rica, said that his government saw some success after introducing a carbon tax and law to remove fossil fuels in 1995. “That tax funded farmers to protect and develop forests on private land, raising their income levels,” he said. “Removing fossil fuel subsidies will enhance the market for new energy solutions by making them more competitive, spurring innovation and development.”
GSI estimates subsidies to fossil fuels account for roughly US$500 billion per year. This includes subsidies to lower the prices of petroleum products, kerosene or liquefied petroleum gas, typically in developing countries, as well as subsidies to the oil, gas or coal industries that are provided by many governments in both developed and developing countries.