G20 countries spent record $1.4 trillion to support coal, oil, gas: Research

Nagpur: After almost 14 years of committing to phase out fossil fuels, the G20 members spent a whopping $1.4 trillion in public money to support fossil fuels in 2022.

In 2009, the G20 governments had committed to phasing out and rationalizing inefficient fossil fuel subsidies in the medium term. However, according to a report — ‘Fanning the Flames: G20 Provides Record Financial Support for Fossil Fuels’ — released by independent think tank International Institute for Sustainable Development (IISD) and its partners, the countries spent a record amount of public money to support coal, oil, and gas.

The amount, which includes fossil fuel subsidies ($1 trillion), investments by state-owned enterprises ($322 billion), and lending from public financial institutions ($ 50 billion), is more than double the pre-Covid-19 and pre-energy crisis levels of 2019. “These figures are a stark reminder of the massive amounts of public money G20 governments continue to pour into fossil fuels despite the increasingly devastating impacts of climate change,” said Tara Laan, senior associate at IISD and the lead author of the study.

The researchers further found that G20 members could raise an additional $1 trillion every year by setting minimum carbon taxation levels of $25–$75 per tonne of carbon dioxide equivalent (tCO2e), depending on country income. They warned that taxes on fossil fuels in G20 member countries currently do not reflect their costs to society — averaging just $3.2 per tCO2e across the G20 — with many members failing to impose windfall taxes on record profits that fossil fuel companies gained last year at the peak of the energy crisis.

Their recommendations include setting a clear deadline to eliminate fossil fuel subsidies— 2025 for developed countries and 2030 at the very latest for emerging economies — to deliver on their 2009 commitment to reform subsidies.

Experts at IISD also highlighted that there were much better ways to support people during a crisis. “Fuel subsidies are, in fact, a notoriously inefficient way to help the poor. Governments should instead provide social welfare through other mechanisms, like targeted welfare payments,” they stated.

Stressing that shifting fossil fuel spending could help solve key global problems, experts said, “Shifting less than a quarter of the $2.4 trillion generated from subsidy reform and carbon taxation could help close the wind and solar energy investment gap — $450 billion per year until 2030 — to limit global temperature rise to 1.5°C, with public support leveraging additional funds from private investors. It could also be used to help end world hunger ($33 billion/year), provide universal access to electricity and clean cooking globally, in ways aligned with net-zero emissions ($36 billion/year), and close the climate finance gap that developed countries committed to mobilize for developing nations ($17 billion/year).”

They added that removing subsidies can also save thousands of lives by reducing fossil fuel-related air pollution, which is responsible for over 5 million deaths per year in G20 members and one in five deaths globally.