An unprecedented coalition of close to 40 governments, hundreds of businesses and influential international organisations has called today for accelerated action to phase out fossil fuel subsidies, a move that would help bridge the gap to keep global temperature rise below 2°C.
On the opening day of the UN Conference on Climate Change (COP21), New Zealand Prime Minister John Key formally presented the Fossil Fuel Subsidy Reform Communiqué to Christiana Figueres, Executive Secretary of the UN Framework Convention on Climate Change (UNFCCC), on behalf of the Friends of Fossil Fuel Subsidy Reform, The Prince of Wales’s Corporate Leaders Group and other supporters of the Communiqué.
The Communiqué calls on the international community to increase efforts to phase out perverse subsidies to fossil fuels by promoting policy transparency, ambitious reform and targeted support for the poorest.
Governments spend over $500 billion of public resources a year to keep domestic prices for oil, gas and coal artificially low. Removing fossil fuel subsidies would reduce greenhouse gas emission by 10 per cent by 2050. It would also free up resources to invest in social and physical capital like education, healthcare and infrastructure, while leveling the playing field for renewable energy.
John Key, Prime Minister of New Zealand, said: “Fossil fuel subsidy reform is the missing piece of the climate change puzzle. It’s estimated that more than a third of global carbon emissions, between 1980 and 2010, were driven by fossil fuel subsidies. Their elimination would represent one seventh of the effort needed to achieve our target of ensuring global temperatures do not rise by more than 2°C. As with any subsidy reform, change will take courage and strong political will, but with oil prices at record lows and the global focus on a low carbon future – the timing for this reform has never been better.”
Christiana Figueres, Executive Secretary of the UN Framework Convention on Climate Change (UNFCCC), said in accepting the Communiqué: “These subsidies contribute to the inefficient use of fossil fuels, undermine the development of energy efficient technologies, act as a drag on clean, green energy deployment and in many developing countries do little to assist the poorest of the poor in the first place. The huge sums involved globally could be better spent on schools, health care, renewable energies and building resilient societies. The current, very low oil prices are a good opportunity to really get going on this issue.”
Stefan Löfven, Prime Minister of Sweden, said: “History will prove fossil fuel to be a dead end. Sweden will be amongst the first fossil free welfare nations of the world. And eliminating fossil fuel subsidies is an important step on this path.”
Hakima El Haite, Environment Minister of Morocco, candidate for the presidency of COP22, said: “Not only do fossil fuel subsidies put a strain on government coffers but they also don’t help the poorest of society.”
Philippe Joubert, Chair of The Prince of Wales’s Corporate Leaders Group and former president of Alstom Power, said: “The CLG’s long-standing efforts to put a price on carbon, including most recently working with the World Bank through the Carbon Pricing Leadership Coalition, will soon deliver results. It doesn’t make sense that, at the same time, governments artificially deflate the cost of coal, oil and gas, the primary cause of GHG emissions. Fossil fuel subsidies must be ended to stop this contradiction and enhance a real transition to low carbon energy.”
OECD Secretary-General Angel Gurría said: “Countries need to demonstrate with concrete actions and policies that they are serious about combating climate change. Reforming harmful fossil-fuel support is a good place to start.”
Close to 40 countries have endorsed the Fossil Fuel Subsidy Reform Communiqué, including Canada, Chile, France, Germany, Italy, Malaysia, Mexico, Morocco, Peru, the Netherlands, the Philippines, Samoa, the United Kingdom, the United States, Uganda and Uruguay.
The Communiqué is supported by The Prince of Wales’s Corporate Leaders Group (23 global companies employing 2 million people worldwide with combined revenues exceeding $170 billion) and other business organisations working with thousands of corporations and investors, including The B Team, the World Business Council for Sustainable Development (WBCSD) and the We Mean Business coalition . The Communiqué has also been endorsed by influential international organisations including the International Energy Agency, the OECD and the World Bank.
Eliminating fossil fuel subsidies can accelerate the economic shift needed to tackle climate change and remove one of the obstacles to delivering the low-carbon future COP21 is aiming for.