Report Says Fossil Fuel Subsidies Will Continue

New report highlights barriers to eliminating fossil fuel subsidies, a policy that was promised during the 2009 G20 meeting.

Published on: Jun 25, 2012

According to a report released by Oil Change International, the G20's 2009 commitment to reduce crude oil subsidies has not been fulfilled, a finding the Global Renewable Fuels Alliance is not pleased with.

The report, "Phasing Out Fossil-Fuel Subsidies in the G20" is the second regarding fossil fuel subsidy phase-out from Oil Change International. The first report was released in 2010.

The newest report, released this month, says that G20's pledge to "rationalize and phase out over the medium term inefficient fossil fuel subsidies that encourage wasteful consumption" would have saved money, aligned with environmental goals, and reduced trade distortions, had it been implemented.

New report highlights barriers to eliminating fossil fuel subsidies, a policy that was promised during the 2009 G20 meeting.
New report highlights barriers to eliminating fossil fuel subsidies, a policy that was promised during the 2009 G20 meeting.

Yet, oil subsidies are expected to more than double by 2020 from $312 billion in 2010 to $660 billion in 2020.

"It is not surprising that the G20 has been unsuccessful in reducing fossil fuel subsidies when 9 months ago the IEA stated that oil subsidies were set to more than double in only a decade's time," said Bliss Baker, spokesperson for the Global Renewable Fuels Alliance.

"The GRFA has repeatedly called on G20 leaders to shift their policy focus from subsidizing oil consumption towards developing biofuel – friendly policies that are proven to reduce our crippling reliance on fossil fuels. Currently, according to the Institute for Energy Research, oil subsidies completely dwarf any economic incentives to promote renewable fuels – this must change," Baker said.

According to the recent report, one of the key factors in this failure is the practice of G20 nations changing their subsidy definitions and not their subsidy policies.

"It is discouraging that the G20 are using bureaucratic loopholes to sidestep their own commitment to reduce the billions of dollars given to big oil companies," Baker said.

The report says that self-reporting of subsidies is also failing. Countries have failed to report on their level of subsidies, making them invisible to the outside world. This lack of transparency and exploitation of bureaucratic loopholes has resulted in no subsidies being eliminated as a result of the 2009 G20 commitment.

Baker said it is important to "ensure that we make real progress in reducing subsidies and encourage the development of real alternatives to crude oil, such as biofuels."