g20: phasing out fossil fuels and accelerating energy ... · of peer review of ffs by all g20...
TRANSCRIPT
G20: Phasing Out Fossil
Fuels and Accelerating
Energy Transition
April 2019
Han Chen, [email protected]
2 Source: OCI and ODI
Starting Point: Phasing Out Fossil Fuel Subsidies
What are subsidies? Any financial contribution by a government that is recipient-specific and confers a benefit on its recipient in comparison to other market participants
Direct Spending
(OECD)
Tax breaks (OECD)
Public finance (OCI)
Investment by state-owned
enterprise
Failure to price externalities
(IMF)
Government support includes: • all financial contributions or direct support from a
government; • foregone revenue through tax breaks; • transfer of risk through provision of debt, equity
and guarantees (public finance); • provision of infrastructure, goods and services
below market value (investment by state-owned enterprise).
3
Source: ODI, OCI
Aligning Investments with Paris Agreement and SDGs
Ask from 420 investors managing over US $32 trillion:
• Fossil fuel subsidies increase the risk of stranded fossil fuel assets, decrease the competitiveness of key industries, including low carbon businesses, and negate carbon price signals. They also potentially perpetuate income inequality while failing to meet the energy needs of those lacking energy access, and damage public health by increasing air pollution.
• They also generate potentially harmful economic, social and environmental costs that are impacting on investors’ portfolios and their ability to deploy capital to support the low carbon transition at the speed and scale required.
https://theinvestoragenda.org/wp-content/uploads/2018/05/GISGCC-briefing-paper-FINAL.pdf
• Commitment first made in 2009 at Pittsburgh G20 Leaders’ Summit: “rationalize
and phase out over the medium term inefficient fossil fuel subsidies that
encourage wasteful consumption”
• Has been reiterated every year since
• Increased commitment by G7 (and Mexico) calling for 2025 deadline
• Progress: “peer review” process has undefined methodology, no consistent
definition of subsidies, and only a few participants and coverage of fossil fuel
production subsidies. Although big countries have taken part – US, China,
Germany, Mexico, Indonesia, Canada – reviews are disappointing.
• Still no robust framework to track / monitor implementation, which makes
assessing progress or comparing countries very difficult
• Paris Agreement Article 2.1(c) and Sustainable Development Goals: Goal 12
(sustainable production and consumption) and Goal 13 (climate action)
4 Source: GSI
Progress on G20 commitment to phase out fossil fuel subsidies
5 Source: GSI, OCI, ODI and FARN: Stories from G20 Countries: Shifting public money out of fossil fuels
1. Set a timeline for the complete and equitable phase-out of
FFS by 2025, and develop by 2020 FFS phase-out
roadmaps to achieve this goal;
2. Establish a timeline and clear guidance for the completion
of peer review of FFS by all G20 members by 2020 to
enable equitable phase out of all FFS;
3. Set up a process to initiate the redirection of energy-
related domestic and international public finance to
only support cost-effective, clean, healthy, human-rights
compliant and safe environmental and social practices by
2020.
6 Source: C20 CCWG
Next Steps to Phase Out Fossil Fuel Subsidies
10 Example: China LCOEs in H1 2019
Cost Savings from Renewables and the Dangers of
Investment in Coal and Gas Power Plants
12 Coalswarm and Greenpeace: A Coal Phase-
Out Pathway for 1.5°C
Phasing Out Coal-Fired Power Plants