Durban COP 17 side event puts spotlight on fossil fuel subsidy reform

DURBAN—December 6, 2011—The substantial environmental and economic benefits of reforming fossil fuel subsidies are being debated on the sidelines of the 17th Conference of the Parties (COP 17) to the United Nations Framework Convention on Climate Change in Durban.

In September 2009, the leaders of the Group of 20 countries agreed to phase out inefficient fossil fuel subsidies over the medium term. Asia-Pacific Economic Cooperation (APEC) governments made an almost identical pledge the same year.

At an event on December 7, 2011, ministers from New Zealand, Costa Rica, Sweden, Switzerland and Finland, along with the International Institute for Sustainable Development's Global Subsidies Initiative (GSI), will encourage G20 and APEC leaders to implement their political commitments to phase out inefficient fossil fuel subsidies as soon as possible, with maximum ambition and transparency.

The International Energy Agency estimates that fossil fuel-consumption subsidies totalled US$409 billion in 2010, an increase of almost US$110 billion from US$300 billion in 2009, placing a significant strain on government budgets in the face of rising international fuel prices.

Below-market fuel prices also bring down the cost of production and consumption, making it harder for cleaner forms of energy to compete, and leading to increased carbon dioxide emissions. A complete phase out of these would reduce carbon dioxide emissions by 5.8 per cent by 2020 as compared with business as usual.

At the same time, the Friends of Fossil Fuel Subsidy Reform, a group of non-G20 countries that support the reform of inefficient fossil fuel subsidies, fully recognize that domestic reform must take into account vulnerable communities' access to essential energy services. Established in June 2010, current members of the group include Costa Rica, Denmark, Ethiopia, Finland, New Zealand, Norway, Sweden and Switzerland.

GSI is a program of the International Institute for Sustainable Development that is dedicated to researching the scale of government subsidies and their impacts on sustainable development. -end-

For more information, please contact: Peter Wooders, IISD senior economist +41 76 430 50 26 or [email protected]; or Damon Vis-Dunbar, IISD communications coordinator, at +41 78 818-0501 or [email protected].