Leading companies from the sector, including Legal and General, Aegon Asset Management, and Aviva Investors, have signed a joint statement calling for G20 governments to set a clear deadline for the phase out of fossil fuel subsidies and public finance for fossil fuels at the 2017 G20 Summit in Hamburg, Germany. The call highlights the risk continued government support for fossil fuels brings to the financial sector.
Research launched earlier this week by the Global Subsidies Initiative and the Overseas Development Institute found that ending subsidies to global fossil fuel production would be equivalent to eliminating all of the emissions from the global aviation sector. Research published in 2015 by the Overseas Development Institute and Oil Change International found G20 governments spend $444 billion each year to support fossil fuel production – despite pledging every year since 2009 to end subsidies and prevent catastrophic climate change.
“In line with the commitments already made by G20 governments, we need to see a clear plan to phase out subsides 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.”
Shelagh Whitley, Head of the Overseas Development Institute’s Climate and Energy research programme, added that 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. 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.
The February 2017 report from GSI and ODI, ‘Zombie energy: climate benefits of ending subsidies to fossil fuel production’, finds that a complete removal of subsidies to fossil fuel production globally would reduce the world’s emissions by 37 Gt of CO2 over 2017-2050. This is roughly the amount of carbon dioxide that would result from burning all proven oil reserves in the United States and Norway.
The November 2015 report from ODI and OCI, ‘Empty promises: G20 subsidies to oil, gas and coal production’, found G20 governments spent $444 billion a year to support fossil fuel production – via national subsidies ($70 billion), investments by state-owned enterprises ($286 billion) and public finance ($88 billion).
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