G20 Backtracks on Fossil Fuel Funding Phase-Out in COVID-19 Recovery

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G20 Backtracks on Fossil Fuel Funding Phase-Out in COVID-19 Recovery

G20 governments still spending more than half a trillion USD on oil, gas, and coal each year, new study reveals
November 10, 2020 — Despite repeated pledges to end inefficient fossil fuel subsidies, G20 governments’ support to fossil fuels has dropped by only 9% since 2014–2016, hitting USD 584 billion annually over the last three years, according to a report released today by the International Institute for Sustainable Development (IISD), the Overseas Development Institute (ODI), and Oil Change International (OCI). This marginal progress will likely be undone this year by billions of dollars committed to fossil fuels in response to COVID-19, researchers say.

“G20 governments were already not on track to meet their Paris Agreement commitments on ending public support for fossil fuels before COVID-19,” says Anna Geddes of IISD, lead author of the report Doubling Back and Doubling Down: G20 Scorecard on Fossil Fuel Funding. “Now, disappointingly, they are moving in the opposite direction. G20 funds for fossil fuels are likely on course to remain constant or even trend upwards again in 2020 compared to the last few years where we’ve seen a slight drop in support.”

According to the latest data from the Energy Policy Tracker, G20 governments have given at least USD 233 billion in additional support through recovery measures to fossil fuel-intensive sectors since the pandemic began. In Doubling Back and Doubling Down, researchers considered recent COVID-19 recovery commitments as well as pre-pandemic policies to rank G20 countries’ progress in phasing out support to fossil fuels.

They looked at seven indicators: transparency, pledges, public money for coal, oil and gas, fossil fuel-based power (both production and consumption), as well as how support has changed over time. In most countries assessed, the progress made during the last three years was described by experts as “poor” or “very poor,” and no country was considered to have made “good progress” in line with reaching Paris Agreement goals. 

Among the G20 Organisation for Economic Co-operation and Development (OECD) members, Germany performed best overall in terms of phasing out fossil fuel funding, while Mexico, Turkey, and the United Kingdom ranked equally lowest. Out of the non-OECD G20 countries, Brazil scored highest while Saudi Arabia came in last.

Top scorer Germany got points for transparency, strong commitments, and relatively lower support for oil and gas production and fossil fuel use. The country’s overall support to fossil fuels dropped 35% relative to 2014–2016. Brazil’s relatively good performance was tied to low support for coal production, fossil fuel-based power and consumption, and a reduction in state-owned enterprise investment in fossils. However, “new measures under consideration could soon reverse this progress,” Geddes says.

On the other end of the spectrum, the United Kingdom and Turkey rank poorly due to a lack of transparency and large subsidies for fossil fuel use, while Mexico was docked for heavy support for oil and gas production and fossil fuel-based power. Saudi Arabia also continues to heavily support oil and gas production and fossil fuel-based power, mostly through large state-owned enterprise expenditures and low consumer energy prices, researchers report.

“No G20 country is performing as it should, but there are some examples that could be followed,” says Angela Picciariello of ODI. “A true leader would mirror Germany’s transparency and strong pledges and go a step further than Italy with a plan to rapidly phase out not only support for coal but also oil and gas. To be in line with 1.5°C and avoid the worst of the climate crisis, G20 governments should rule out any continued fossil fuel support, in recovery spending or otherwise.”

Although this report and other recent data on public COVID-19 commitments indicate that the already slow progress on phasing out fossil fuel funding has now been thrown into reverse, researchers say there are upcoming opportunities for governments to turn the tide. 

“Governments are in the midst of rolling out historic levels of public finance in response to the pandemic. Instead of bankrolling another major crisis—climate change—our governments should invest in a resilient future,”  says Bronwen Tucker of OCI. “We are in a critical window for governments to shift the support currently going to fossil fuels towards public health, social supports, and a just transition to renewable energy.”

“China, Japan, and South Korea’s recently announced net-zero emissions plans and the EU’s Green Deal initiative indicate that there is momentum to increase ambition and demonstrate a commitment to climate action,” says Geddes. “The current Finance in Common summit, the G20 summit on November 28 and the Paris Agreement’s fifth anniversary in December are chances to build on these. Although the last three years have shown a lack of progress from governments, we can make the next three years a turning point.”

Note to Editors and Methodological Points

The G20 Scorecard on fossil fuel funding builds on previous reports:

G7 fossil fuel subsidy scorecard: tracking the phase-out of fiscal support and public finance for oil, gas and coal