G20 Leaders Agree to Phase Out Fossil Fuel Subsidies
26 September 2009
One of the outcomes of the meeting of G20 leaders in Pittsburgh this week was an agreement to phase out and rationalize over the medium-term inefficient fossil fuel subsidies while providing targeted support for the poorest.
Inefficient fossil fuel subsidies encourage wasteful consumption, distort markets, impede investment in clean energy sources and undermine efforts to deal with climate change. The Organization for Economic Cooperation and Development (OECD) and the IEA have found that eliminating fossil fuel subsidies by 2020 would reduce global greenhouse gas emissions in 2050 by ten percent. Many countries are reducing fossil fuel subsidies while preventing adverse impact on the poorest. Building on these efforts and recognizing the challenges of populations suffering from energy poverty, we commit to:
Rationalize and phase out over the medium-term inefficient fossil fuel subsidies that encourage wasteful consumption. As we do that, we recognize the importance of providing those in need with essential energy services, including through the use of targeted cash transfers and other appropriate mechanisms. This reform will not apply to our support for clean energy, renewables, and technologies that dramatically reduce greenhouse gas emissions. We will have our Energy and Finance Ministers, based on their national circumstances, develop implementation strategies and timeframes, and report back to Leaders at the next Summit. We ask the international financial institutions to offer support to countries in this process. We call on all nations to adopt policies that will phase out such subsidies worldwide.
—G20 Leaders’ Statement
The leaders of the G20 requested relevant institutions, such as the IEA, OPEC, OECD, and World Bank, to provide an analysis of the scope of energy subsidies and suggestions for the implementation of this initiative and report back at the next summit.
The Group of Twenty (G20) Finance Ministers and Central Bank Governors was established in 1999 to bring together systemically important industrialized and developing economies to discuss key issues in the global economy. The inaugural meeting of the G-20 took place in Berlin, on December 15-16, 1999, hosted by German and Canadian finance ministers.
The G20 is made up of the finance ministers and central bank governors of 19 countries: Argentina; Australia; Brazil; Canada; China; France; Germany; India; Indonesia; Italy; Japan; Mexico; Russia; Saudi Arabia; South Africa; South Korea; Turkey; United Kingdom; and the United States of America. The European Union, which is represented by the rotating Council presidency and the European Central Bank, is the 20th member of the G-20.
Yeah right. Ain't gonna happen.
Posted by: dursun | 26 September 2009 at 08:46 AM
Who is going to check if Canada and USA really do it?
What will happen to existing huge accumulated tax credits. Many oil firms have enough tax credits to cover all future income taxes for the next 10 years.
Very few Oil firms have paid income taxes in the last decades.
When will we switch the current Ethanol import duties to fossil liquid fuel? That would be a move in the right direction. An extra $0.56/gal, on all imported fossil liquid fuel, could raise gas price by about $0.40/gal at the pump. The Fed could use the extra revenues to reduce the current very high deficits.
Posted by: HarveyD | 26 September 2009 at 09:20 AM