—All fossil fuel subsidies are inefficient, because they form a roadblock to effective climate action and sustainable development.
–It is time to listen to the WTO’s group of Friends of Fossil Fuels Subsidies Reform and put their proposal into action, in line with the Glasgow Climate Pact.
—WTO negotiators are reportedly working day and night to reach a “fish deal” before their Trade Ministers land in Geneva on 30 November.
Logic dictates that if you want to starve a beast, you should stop feeding it. Accordingly, common sense dictates that governments should stop funding activities which contribute to crises they are working like crazy to address.
So it was a no-brainer for the Glasgow Climate Pact adopted at COP 26 to include a call for the phase-out of inefficient fossil fuel subsidies. As long as governments use taxpayers’ money to support coal, oil, and natural gas infrastructure development and operations, they are undermining their own commitments to the Paris Agreement target to keep global warming below 1.5ºC.
Governments should stop funding activities that drive the crises they are working like crazy to address.
When the adjective “inefficient” was added to “phase out fossil fuel subsidies” to weaken that commitment, it didn’t fool anyone. All fossil fuel subsidies are inefficient, because they form a roadblock to effective climate action and sustainable development, and in doing so they increase the vulnerability of people and our planet to climate change impacts.
In 2020, according to the International Monetary Fund (IMF), coal, oil, and natural gas received approximately USD 470 billion in explicit subsidies. Also in 2020, the International Renewable Energy Agency (IRENA) tracked some USD 634 billion in energy-sector subsidies, and they found that about 70% was going to fossil fuels.
The latest combined Nationally Determined Contributions (NDCs) submitted under the Paris Agreement at COP 26 will put us on a 2.7ºC warming trajectory, a long way from the 1.5ºC target. Governments in Glasgow therefore agreed that NDCs should be revised and improved next year, and not wait for the five years stipulated by the Paris Agreement. One clear and effective way to reflect an increased ambition in NDCs would be to eliminate fossil fuel subsidies, and to use this money to invest in improving energy efficiency and scaling up renewables.
Governments’ next gathering to discuss subsidies is coming up quickly. The multilateral forum for discussion and regulation of subsidies is the World Trade Organization (WTO) which is about to hold a ministerial conference for the first time since 2017. The 12th WTO Ministerial Conference (MC12) will take place in Geneva, Switzerland from 30 November to 3 December 2021.
The WTO’s fisheries subsidies negotiations 20 years-long record is not encouraging.
…If eliminating USD 22 billion in fisheries subsidies takes 20 years or more, what chance is there to eliminate fossil fuels subsidies amounting to USD 470 billion in time to prevent catastrophic climate change? In just a few days, the Trade Ministers of the 164 WTO Members will have to respond to this question. An existential question not just for the WTO, but for humankind as a whole.