Energy subsidies and tax revenues, investments by state-owned enterprises (SOEs) and credit support can either undermine or encourage sustainable development and decarbonisation. In 2009, G20 governments committed to end government support to fossil fuels through a number of reform pledges. Since then, some G20 governments have used various flows of public money to make progress in shifting support away from fossil fuels.
This working paper brings together eight stories that illustrate how reforms can be enabled and implemented to align flows of public money with the Paris Agreement and sustainable development goals:
Story 1 provides the example of Indonesia as a country that saved $15.6 billion by reforming untargeted subsidies for gasoline and diesel in 2015.
Stories 2 and 3 highlight recent reforms that remove subsidies for fossil fuel exploration, development and production in Canada and Argentina.
Story 4 features reforms in the European Union, including progress in its accountability on fossil fuel subsidies and the phase-out of subsidies for hard coal mining by the end of 2018.
Story 5 unpacks the progress on shifting credit support from public financial institutions, including multilateral development banks, away from fossil fuels.
Story 6 deals with the examples of SOEs in coal mining and fossil fuel power diversification in clean energy in China, India and Sweden.
Stories 7 and 8 discuss a related issue of not just removing government support from fossil fuels, but also increasing taxation on their consumption and production, in China, Saudi Arabia, South Africa and India.
The research finds that the shift of public money from fossil fuels to clean energy must occur at a much faster rate for the G20 to meet the SDGs and climate goals. Futhermore, G20 governments should learn from each others' efforts undertaking reforms while protecting vulnerable groups and ensuring a just transition for workers and communities currently dependent on fossil fuels.
International Institute for Sustainable Development 2018