The world is on track for a global temperature rise of 2.7 degrees Celsius by the end of this century, according to the UN Environment Program (UNEP). Climate experts say that to avoid catastrophic changes to the planet’s climate, global temperature rise needs to stay below 1.5 degrees Celsius this century, which is the goal of the Paris Agreement. To meet that target, the world needs to reduce annual greenhouse gas (GHG) emissions in the next eight years.
G20 countries and greenhouse gas emissions
G20 countries account for about 80 percent of global GHG emissions. Energy-related carbon dioxide emissions account for about 80 percent of total G20 GHG emissions. If G20 countries set emission reduction targets for 2030 and net zero emissions targets for 2050, the global temperature rise at the end of the century could be 1.7 C, according to a report by World Resources Institute and Climate Analytics.
The increase of fossil fuel financing
The support for fossil fuels by G20 countries has decreased by only nine percent since 2014, according to a November 2020 report by the International Institute for Sustainable Development. From 2017 to 2020, the support reached $584 billion a year through direct budgetary transfers and tax expenditures, price support, public finance, and state-owned enterprise investment for fossil fuel production and consumption. Governments supported oil and gas production more than any other fossil fuel-related activity, at $277 billion.
Since the COVID-19 pandemic began in early 2020, G20 governments have committed $323.58 billion to support fossil fuel energy, according to data by Energy Tracker. Oil and gas received the lion’s share at $244 billion.
Seven of the G20 members increased fossil fuel support from 2015 to 2019, with five of them allocating over $1 billion to coal in 2019, according to a July 2021 report by Bloomberg NEF and Bloomberg Philanthropies. While 12 G20 countries implemented at least one nationwide carbon pricing policy, only half of the policies can drive significant emissions reductions by covering a large enough share of emissions with a high enough price. The report states that those policies are “weakened by concessions such as generous free allocation of permits,” the report states.
Financing for fossil fuels outpaces renewable energy
Are G20 countries taking climate change seriously? Report after report indicates the answer is a ringing “no!” G20 countries financed at least $63 billion every year from 2018 to 2020, with $188 billion in total for oil, gas, and coal projects, an October 2021 report by Oil Change International and Friends of the Earth found. They financed the fossil fuel projects through their development finance institutions, export credit agencies, and multilateral development banks (MDBs). The financing for fossil fuels was 2.5 times greater than support for renewable energy, which only received an average of $26 billion every year in support.
Four countries (Canada, Japan, South Korea, and China) accounted for almost half of the MDB and G20 fossil fuel finance. Between 2018 and 2020, the four countries provided $11.0 billion, $10.9 billion, $10.6 billion, and $7.3 billion a year respectively. Germany, France, and Japan provided the most public finance for renewable energy, with $2.8 billion, $1.4 billion, and $1.3 billion, respectively. The report finds those levels to be “many times lower than needed to meet climate targets.”
Fossil fuel subsidies reform isn’t sufficient
G20 countries committed to phasing out inefficient fossil-fuel subsidies in 2009. Despite that commitment, support for fossil-fuel production increased by 30 percent in 2019, as a July 2021 report by the Organization for Economic Co-operation and Development (OECD) and International Energy Agency (IEA) shows. In 2019, OECD countries reversed a five-year downward trend in support for fossil fuel production. The total fossil fuel support increased by five percent each year. The report cites a 30 percent increase in direct and indirect support for fossil fuel production as the key driver of the reversal.
The oil and gas sector received direct support to finance fossil fuel infrastructure projects and pay off corporate debt, in addition to benefitting from tax provisions that provided preferential treatment for capital expenditures for fossil fuel production. That all drove fossil fuel producer estimates to increase by nine percent in 2019 compared to 2017.
North American fossil fuel support
Measures taken in North American countries accounted for 51 percent of the increase in OECD support for fossil fuels in 2019. Mexico’s government tripled its fossil fuel support between 2017 and 2019 through mainly producer support. The government provided direct transfers to PEMEX, Mexico’s state-owned petroleum company, to pay off debt and pension liabilities plus build new infrastructure, which included a refinery in the state of Tabasco. Between 2017 and 2019, U.S. government support for fossil fuels increased by 28 percent through measures put in place before 1990.
Ending fossil fuel support
While G20 leaders declare that they want to limit global temperature rise to 1.5 C, their continued financial support and fossil fuel subsidies reveal the truth. Until G20 countries determine to eliminate support for fossil fuels, emissions will increase.
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