This uncomfortable truth is weakening clean energy sector

Report says G20 governments are propping up dirty fuel

This uncomfortable truth is weakening clean energy sector
Steve Randall

Governments of some of the world’s wealthiest countries continue to provide significant subsidies to fossil fuels according to a new report.

The International Institute for Sustainable Development (IISD) says that governments have more than doubled the amount of financial support they provide to coal power plants in just three years, despite pledging a decade ago to phase out subsidies to all fossil fuels and help prevent catastrophic climate change.

While private and institutional investors are moving to sustainable alternatives, governmental support for fossil fuels is impacting the adoption of clean energy.

Canada is one of a handful of G20 countries which has taken key steps to moving away from coal, but the report says even these more enlightened nations are missing promised targets.

Although overall investment has fallen from historic levels, the average annual amount G20 governments spent to help build and sustain coal-fired power plants increased from $17 billion to $47 billion between 2014 and 2017.

Overall, the report reveals that G20 governments are currently providing at least $64bn each year to prop up the production and consumption of coal; with almost three-quarters of this is going to coal-fired power production, the biggest single contributor to the rise in CO2 emissions in 2018.

This comes from:

  • $28bn per year through governments’ public finance institutions such as bilateral development banks and export credit agencies investing in coal projects, with the majority of this being spent abroad
  • $15bn per year of fiscal support through budget allocations and tax exemptions
  • $21bn per year invested through majority state-owned coal mining and utility companies

And the report says that it’s likely some assets are subsidised multiple times.

“In reality, government support to coal is much larger than our report’s numbers show, because many G20 countries still lack transparency on the many ways they subsidise coal,” said Ivetta Gerasimchuk, IISD Lead for Sustainable Energy Supplies.

Level playing field for clean energy
‘It has now been ten years since the G20 committed to phasing out subsidies to fossil fuels, yet astonishingly some governments are actually increasing the amount they give to coal power plants,” said lead author Ipek Gençsü, Research Fellow at the Overseas Development Institute. “Momentum is growing around the world for governments to take urgent action to tackle the climate crisis. Ending subsidies to coal would bring environmental, social and economic benefits to all and help set a level playing field for clean energy.’

The report calls on the G20 countries to end support for coal and make good on their promises to end subsidies to all fossil fuels. Governments should:

  • Urgently agree to a complete phase-out of support to coal mining and coal-fired power
  • Complete peer reviews of their support to coal and other fossil fuels by 2020
  • Establish country-level plans for ending support to coal which ensure there is a ‘just transition’ for workers and communities, particularly the most vulnerable, and that do not prolong the production and use of coal