From exploration / production through to consumption coal is subsidised to the tune of US $47 billion annually by G20 nations, yet they claim to be wanting to cut greenhouse gas emissions. What’s going on?
John Christensen is a forensic auditor and economist. He is is a co-founder and director of the Tax Justice Network International.
Cross-posted from Tax Justice Network
Ten years ago the G20 countries committed to taking the global lead in combatting climate change. However, a new report tracking government subsidies to the fossil fuel industries reveals that despite the promises made in 2009, major G20 countries, including Japan which hosts the 2019 G20 meeting starting this coming Friday, continue to subsidise production and consumption of fossil fuels.
Despite coal being the most polluting fossil fuel, the new research shows that G20 countries are spending approximately US$64 billion annually on subsidising coal alone. To make matters worse, the G20 countries have neglected to define or document the full extent of their subsidies, making it harder for independent researchers to monitor their performance.
The report, published by the the Overseas Development Institute (ODI) and others, highlights Japan as one of the largest financial supporters of coal, despite Prime Minister, Shinzo Abe, having said in September 2019:
“Climate change can be life-threatening to all generations … We must take more robust actions and reduce the use of fossil fuels.”
Notwithstanding promises to phase out subsidies to coal, the report shows how G20 governments prolong subsidies while ostensibly supporting a market-led transition away from fossil fuels towards renewable energy sources. Subsidies to the coal sector take a variety of forms, and are applied at every phase from upstream exploration and production to downstream consumption.
The report reveals that while some governments have reduced subsidies to domestic coal fired production they continue to subsidise the construction of new coal fired power stations in other countries; a policy coherence failure that has been criticised by both politicians and campaigners.
Ahead of the 2019 G20 Meeting starting later this week campaigners are calling for:
- the complete phasing-out of government direct and indirect subsidies to coal mining and coal-fired power;
- comprehensive country-level peer review of coal and other fossil fuel subsidies within the coming 12 months;
- agreement of country-level plans for ending government support to coal, implementation of measures to ensure that energy transition policies do not support coal production and consumption (especially in poorer countries);
- and implementation of measures to ensure a ‘just transition’ for workers and communities, and target support at most vulnerable groups during the energy transition.
Fiscal support in the form of tax breaks are a significant part of the overall package of government support to coal producers, which also includes public financing of new coal fired facilities, and support for state owned coal industries. As renewable energy investment costs have tumbled in the past decade, coal-fired electricity production has become increasingly less profitable, and a large proportion of existing capacity is identified as being in high-level financial stress.
King Coal is clearly dying but is being kept alive on life-support, much to the detriment of ecological survival. G20 countries must now meet their promises to entirely remove subsidies to coal.