G20 member countries collectively allocated subsidies exceeding $ 3.3 billion to the oil, coal, gas and fossil fuel-based power generation sectors between 2015 and 2019, a level inconsistent with the ‘Paris Agreement.
That’s according to a major new report from Bloomberg NEF and Bloomberg Philanthropies, titled “Climate Policy Factbook.” The policies assessed cover three areas: phasing out financial support for fossil fuels, pricing emissions and encouraging disclosure of climate risks. Among the G20 countries, only France and Italy were seen as making good political progress in all three areas.
Of particular concern is the lack of progress in phasing out financial support for fossil fuels. The report highlights the fact that direct support for fossil fuels from G20 governments in 2019 exceeded $ 636 billion, a decline of just 10% since the ratification of the Paris Agreement in 2015.
Indeed, seven of the members actually increased their financial support during this period, namely Canada, the United States, Australia, Indonesia, France, China, Brazil and Mexico.
Over the five-year period assessed, countries collectively provided $ 3.3 billion in fossil fuel subsidies, the report says, with 60% going to producers and utilities and 40% to consumer subsidy programs. . This figure is probably underestimated, Bloomberg believes.
Direct financial support, according to the report, “distorts prices and risks increasing investment in long-lived, emission-intensive assets.”
Victoria Cuming, head of global policy at Bloomberg NEF, explained: “This funding really encourages the potentially unnecessary production and use of fossil fuels and may mean that emission-intensive assets are funded today, blocking thus their emissions for decades.
The $ 3.3 billion, according to the report, could have financed the creation of 4,232 GW of new solar power plants – a capacity more than 3.5 times the size of the US grid.
The G20 agreed in 2009 to phase out “inefficient” fossil fuel subsidies, but no binding date has been set and green groups have accused the group of not defining the term correctly.
This year’s G7 meeting saw members agree to end direct government support for new thermal coal production capacity without co-located carbon capture and storage (CCS) technologies by the end of this year. . All other “inefficient” fossil fuel subsidies will then be phased out by 2025. However, Canada did not sign the final communiqué of the Carbis Bay summit in Cornwall.
The Bloomberg NEF report comes the same week that a new analysis by the World Benchmarking Alliance (WBA), CDP and ADEME found that the oil and gas sector is on the verge of burning around 80% of the global carbon budget. that the world will need. to be respected if the 1.5C trajectory of the Paris Agreement is to be achieved by 2050. This study covered public fossil fuel companies as well as the private sector.
Carbon pricing and climate risk
When it comes to other policy areas covered in the Bloomberg NEF report, the G20 countries have again proven to be in bad shape.
On carbon pricing, 12 countries have implemented at least one national policy – but the report says only six of those countries have taken actions that “will result in significant reductions in emissions” (i.e. ‘they imply a sufficiently high price and cover a sufficiently large share of emissions).
France, Italy and Germany are named the leaders in carbon pricing, “largely because of their participation in the EU’s Emissions Trading System (ETS)”. Canada and the UK, which recently launched their own post-Brexit ETS, also rank well in the report’s ranking.
The G20 countries without carbon pricing are Brazil, India, Indonesia, Russia, Saudi Arabia and Turkey. Countries where the per tonne carbon price is found to be too low by the report include Argentina ($ 10), Australia ($ 12), South Korea ($ 12), South Africa ($ 8 ), China ($ 6), the United States ($ 6), Japan ($ 3) and Mexico ($ 2). Italy, the country with the highest average price over the study period, exceeded $ 67 per tonne.
When it comes to climate risk disclosure, the report paints a picture of warm words but little political action. The UK and the EU have implemented climate risk disclosure policies to align companies with recommendations from the Climate Related Disclosure Task Force (TCFD). This covers the UK, Germany, Italy and France, but no other G20 member has legislation on this. The G7 meeting saw finance ministers agree that TCFD-aligned disclosures should become mandatory, but this has yet to be translated into law for Canada, the United States or Japan.
Cuming of Bloomberg NEF summed up: “Given that the G20 accounts for nearly three-quarters of global emissions, the progress of these governments in these three areas would be a huge step forward in tackling climate change. So far, they have not yet spoken. “