Staggering $1.4 Trillion: G20 Nations’ Fossil Fuel Support Exposed in IISD Report Ahead of Leaders’ Summit

New Delhi, August 23, 2023: As the G20 Leaders’ Summit approaches in September, a groundbreaking report has unveiled startling figures: G20 member nations allocated a staggering $1.4 trillion last year to prop up fossil fuels. Released on Wednesday, the report titled “Fanning the Flames: G20 provides record financial support for fossil fuels” by the International Institute for Sustainable Development (IISD) has raised concerns over the dissonance between climate commitments and financial decisions.

The report underscored that this colossal sum surpassed double the pre-Covid-19 and pre-energy crisis expenditures of 2019. These allocations encompassed subsidies, investments by state-owned enterprises, and public financing, emphasizing the extent to which fossil fuel reliance persists.

Calling for resolute action, the authors of the report implored the G20 to align with climate commitments and cease public financial outflows to fossil fuels, except those vital for providing energy access to the most marginalized. Significantly, India, as the G20 chair, can exhibit global leadership, having drastically reduced fossil fuel subsidies by 76% from 2014 to 2022, while intensifying support for clean energy.

“The boldest, fastest action should be from the G20’s highest per-capita income members… The G20 should incentivize consumers and investors to shift away from fossil fuels by setting minimum carbon taxation levels,” the report emphasized.

In 2009, G20 governments pledged to phase out and rationalize inefficient fossil fuel subsidies in the medium term. However, this report highlights how these commitments have been disregarded, with a record amount of public funding still bolstering coal, oil, and gas.

“The G20 has the power and the responsibility to transform our fossil-based energy systems… take meaningful actions to eliminate all public financial flows for coal, oil, and gas,” Tara Laan, Senior Associate at IISD and the lead author of the study, emphasized.

Additionally, the report proposed that establishing a carbon tax floor of $25–50 per tonne of carbon-dioxide emitted (tCO2e) could generate an extra $1 trillion annually. These funds could address critical global issues, including climate goals.

Redirecting even a fraction of the $2.4 trillion generated from subsidy reform and carbon taxation could bridge the gap in wind and solar energy investments, contributing to limiting global temperature rise to 1.5 degrees Celsius.

Despite these findings, G20 countries failed to unite in addressing the climate crisis during ministerial talks, as reported on July 29. The discord encompassed scaling up renewable energy, curbing fossil fuel usage, and ensuring greenhouse gas emissions peak by 2025.