Analysis

The Friends of Fossil Fuel Subsidy Reform: Supporting the G-20 and APEC commitments

The Friends of Fossil Fuel Subsidy Reform is a group of countries committed to supporting the reform of inefficient fossil-fuel subsidies. In this joint statement, the Friends outline why they formed and what they aim to achieve.

In 2009 and again in 2010, G-20 and APEC Leaders signalled their political commitment to the reform of inefficient fossil-fuel subsidies, as set out in their communiqués.

The rationalisation and phase-out of inefficient fossil-fuel subsidies that encourage wasteful consumption offers significant environmental and climate change benefits. Research suggests that reform of fossil-fuel subsidies could reduce global GHG emissions up to 10% by 2050 and make a substantial contribution to keeping global warming below 2 degrees in 2050. Reforms to fossil-fuel subsidies would also remove an existing disincentive to the development and greater uptake of renewable sources of energy.

An informal group of non-G-20 countries has emerged to encourage the G-20 and APEC Leaders’ initiatives on fossil-fuel subsidies reform. Known as the ‘Friends’ of fossil-fuel subsidy reform, this group of countries is united by a commitment to concerted international action on climate change and coherence in international trade and environment policy. The Friends group believes that it is important that like-minded non-G-20 countries publicly support the G-20 as it tackles this politically and economically complex initiative.

The Friends group was launched in June 2010 and currently includes Denmark, New Zealand, Norway, Sweden and Switzerland. Consolidation of the Friends initiative continues and membership is expected to expand. An informal Ministerial meeting of the Friends was held at the UNFCCC climate change meeting in Cancun last December.
The Friends’ objective is to encourage the G-20 to reform subsidies and in particular to ensure:

•  Ambition: the level of ambition remains high; and,
•  Transparency: that this remains an important guiding principle for the G-20 process.

The Friends commend the G-20 on having made good progress so far, including the publication of G-20 country-specific lists of subsidies and phase-out strategies in July 2010, along with the Joint Report on fossil-fuel subsidies prepared for G-20 leaders by the IEA, OECD, OPEC and World Bank.

These actions contribute to the ambition and transparency of the G-20 initiative. Even so, the Friends believe that more remains to be done by the G-20 to ensure it meets the challenge it has set itself.

In particular, the Friends encourage the G-20 to demonstrate its continued commitment in future Summit Communiqués, including through sharing evidence of its progress towards rationalising and phasing-out inefficient fossil-fuel subsidies in its member countries. The Friends also encourage the G-20 to continue to rationalise and phase out inefficient subsidies for both the consumption and production of fossil fuels.

The IEA and OECD are continuing their efforts to gather information and develop time-series data bases on production and consumption subsidies. Such databases will be of great practical use to countries with fossil-fuel subsidies, and will enable further analysis of the impacts of reforming such subsidies. The Friends hope that this information will enable more effective transition policies to be put in place, ensuring that reform takes into account the development needs of vulnerable groups. The Friends acknowledge the important contribution of international organisations to effective fossil-fuel subsidies reform.

Civil society has also played an important role in raising awareness of fossil-fuel subsidies and the G-20 Initiative. The Global Subsidies Initiative (GSI) in particular provides important technical expertise and highlights that civil society pressure will be important for the delivery of the G-20 commitment. Given wide-spread public concern about climate change, it is only a matter of time before citizens across the globe question the logic of continuing to subsidise fossil fuel use, particularly in the context of international climate change efforts.

The Friends of Fossil Fuel Subsidy Reform strongly encourage the G-20 to continue its efforts towards meeting its important objective.

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