G20 nations supported coal, oil, and gas with unprecedented spending of $1.4 trillion

A recent report from the International Institute of Sustainable Development (IISD) has highlighted that G20 member nations contributed a staggering US$1.4 trillion in support of fossil fuels. This amount, which surpasses pre-Covid levels and is more than double the previous figure, contradicts the G20's earlier commitments to phase out such subsidies. The report, unveiled by the IISD, outlines the breakdown of this financial support, revealing that it encompassed fossil fuel subsidies totalling US$1 trillion, investments by state-owned enterprises amounting to US$322 billion, and lending from public financial institutions totalling US$50 billion.

The IISD emphasizes the urgency for the G20 to address the issue of fossil fuel subsidies at the upcoming Delhi Leaders’ Summit. It calls for decisive actions to eliminate all public financial flows directed towards coal, oil, and gas. In 2019, G20 nations provided US$613 billion in total support for fossil fuels, with US$247 billion dedicated to subsidies. Despite the pledge in 2009 to phase out inefficient fossil fuel subsidies over the medium term, last year's support for fossil fuels exceeded four times the average of the previous decade.

The report notes that most nations provided subsidies by selling fossil fuels, such as crude oil, at discounted rates compared to international prices. Rising crude oil prices, currently at US$85 per barrel, contribute to the challenge, and the G20's commitments in June were criticized for their diluted stance on phasing out fossil fuels and promoting green energy. The International Energy Agency reported a record-high world oil demand, projecting an expansion to 102.2 million barrels per day in 2023, with China responsible for over 70% of the growth.

To address the issue, IISD researchers suggest that G20 members could generate an additional US$1 trillion annually by establishing minimum carbon taxation levels ranging from US$25 to US$75 per ton of carbon dioxide emissions. This approach aims to incentivize the reduction of reliance on environmentally harmful fuels. The researchers also urge G20 nations to set clear deadlines for eliminating fossil fuel subsidies—2025 for developed countries and 2030 for developing nations—in alignment with their 2009 commitment. This move could redirect funds towards welfare programs, and the report estimates that subsidy reform and carbon taxation could generate US$2.4 trillion. Allocating a quarter of this amount could bridge the annual investment gap of US$450 billion until 2030, necessary to limit the global temperature rise to 1.5 degrees Celsius.

Furthermore, the report underscores that such funds could be used to address critical global challenges, including ending world hunger, providing universal access to electricity and clean cooking, and reducing pollution associated with fossil fuel usage.