It is hoped that doing this will accelerate green investment and reduce climate risk, after a new study showed that complete removal of subsidies would decrease the world’s CO2 emissions by 37Gt over 2017-2050.
This is approximately the same amount that would result from burning all proven oil reserves in the US and Norway, and is likely to be a low-end estimate as it is based on conservative assumptions regarding subsidies.
The statement, signed by organisations such as Aegon Asset Management and Aviva Investors, said: “Subsidies and public finance supporting the production and consumption of fossil fuels are a key concern to the finance sector.
“They increase the risk of stranded fossil fuel assets, decrease the competitiveness of key industries, including low‐carbon businesses, and negate the carbon price signals many of us have been calling for.
“They are also notoriously inefficient from an economics standpoint and create a significant burden on government budgets, perpetuate income inequality by benefiting the richest consumers while failing to meet the energy needs of those lacking energy access, and damage public health by increasing air pollution.”
The G20 set out objectives to address climate risk last year, which included:
• Enhancing the ability of the financial system to mobilise private capital for green investment
• Building well-functioning, open, competitive, efficient, stable, transparent energy markets, and shaping an affordable, reliable, sustainable and low greenhouse gas emissions energy future
• Achieving sustainable development and strong and effective support and actions to address climate change, and the timely implementation of the Paris agreement.
“Taking action to end subsidies and public finance for fossil fuels will be key for the G20 in meeting these objectives,” the statement added.
The report, which revealed how much CO2 emissions would be reduced by removing subsidies, was the first of its kind, showing both first- and second-order impacts of taking such action.
Its lead author, Ivetta Gerasimchuk, said: “It’s no secret that coal, oil and gas companies are extracting fossil fuel from fields that would be uneconomical without government support – what we call ‘zombie energy’.
“However, we now have a much better understanding of how these subsidies skew global energy markets, and ultimately influence the supply and consumption of fossil fuels.”