As progress towards the G-20’s commitment to reform fossil-fuel subsidies remains slow, advocates and champions of reform have begun to look for next steps and alternative paths. One of the most promising venues where progress is already happening is the United Nations Framework Convention on Climate Change (UNFCCC).
 
This March, Norway and New Zealand, members of the group of nations known as the Friends of Fossil-Fuel Subsidy Reform, indicated in formal UNFCCC submissions that they wished to see Parties submit information on their fossil-fuel subsidies as part of national communications obligations (see the Global Subsidies Initiative interactive G-20 timeline). The submissions were widely applauded by subsidy reform advocates globally.
 
Fossil-fuel subsidies of all kinds have impacts on energy consumption and thus on emissions. The International Energy Agency has estimated that consumer subsidy removal in the 37 largest developing countries alone would reduce emissions by at least 5.8% by 2020. Higher rates of per capita fuel consumption and emissions in OECD countries suggest that much higher emissions reductions are possible with a global phase out of both production and consumption subsidies.

And although some reporting already takes place as part of the G-20 process, it has varied in approach and quality. Each country, with regard to their own national circumstances, has defined “inefficient fossil-fuel subsidies that encourage wasteful consumption” as they see fit. In addition, the submissions are not reviewed before their acceptance and independent monitoring and evaluation has identified many potential omissions.
 
Making subsidy reporting part of the existing UNFCCC process would have some distinct advantages. National communications and reporting is widely regarded to be one of the success stories of the UNFCCC, as regular submissions by both developed and developing country Parties paint a reliably robust picture of the sources of greenhouse gases globally. Parties submit their reports to the UNFCCC Secretariat, who, with the assistance of experts, review the submissions and give guidance on how reports might be improved.
 
Currently, Annex 1 (developed country) Parties to the UNFCCC have a general, but not specific, obligation to report on policies and measures that “encourage activities that lead to greater levels of anthropogenic emissions…than would otherwise occur”.  In other words, under their current obligations, developed countries could be reporting on fossil-fuel subsidies, but they have not been.
 
Guidelines are of course different with regard to developing countries, which have less specific reporting obligations, in part due to concerns about the capacity in developing country governments for increased reporting. With regard to consumer fossil-fuel subsidies, this concern can be partially alleviated by the fact that the IEA already provides ongoing data on the size and scope of consumption subsidies. Advocates of subsidy reform efforts should help ensure that sufficient technical capacity exists to meet reporting requirements.
 
Norway and New Zealand’s recommendations have been submitted as part of a process agreed in Cancun last December to revise and update guidelines for national communications.
 
In its submission to the Secretariat, Norway noted that, “…guidelines should encourage reporting of action that might not have mitigation as primary objective but still have mitigation benefits. Reform of fossil-fuel subsidies is one example in this regard.”
 
New Zealand further noted that reporting on fossil-fuel subsidies “is also helpful from a domestic policy perspective as it clarifies for governments the cross-linkages and impacts between policies with different objectives, but which have mutually reinforcing outcomes.”

The official timeline for this process aims to approve the revised guidelines by the time Parties meet in Durban, South Africa, this December. It is quite likely that the specifics will be discussed at a forthcoming workshop, perhaps in October 2011.
 
Beyond reporting alone, there are other discussions in the UNFCCC where the inclusion of fossil-fuel subsidies could be helpful. One potentially important area is climate finance.

Under the UNFCCC, developed country Parties have an obligation to provide global climate finance.  In Copenhagen in 2009, U.S. Secretary of State Hillary Clinton pledged US$ 100 billion annually would be found by the end of this decade by developed countries. But where is this money going to come from?
 
Since the provision of subsidies uses up scarce public funds, and because the global allocation of funds for climate change mitigation and adaptation is a central issue, the redirection of existing fossil-fuel subsidies in developed countries is one of several ideas for so-called “innovative sources” of public finance.  Last year, the High Level Advisory Group on Climate Change Financing (AGF) examined the issue and noted:
 
Phasing out fossil energy subsidies has political momentum among G-20 countries. It could be politically acceptable in some of these countries to redirect a portion of their subsidies to international climate finance. Depending on the number of countries that participate, the speed at which they remove their subsidies, and the amount that they choose to redirect for climate finance, this approach could lead to a predictable source of a few billion up to US$ 8 billion dollars a year.
 
While it should be noted that most observers consider the US$ 8 billion per annum estimate to be quite low (thus stressing the need for accurate reporting), the idea is sound in concept.
 
On the other side of the finance equation, developing countries are expected to produce Nationally Appropriate Mitigation Actions (NAMAs). Reform of existing consumer subsidies seems ideally suited to being described as a NAMA, and doing so could potentially entail financial and technical support to make price reform politically possible. Such actions would be win-win for national budgets and the climate.

In short, there are multiple paths forward for subsidy reform advocates in the UNFCCC. Because the Climate Convention has a Secretariat and a functioning reporting arm, it should be used to augment the existing processes in the interests of transparency. Subsidy reform is in fact too important an issue to leave to one institution. Its progress in any or all forums will require the engagement of country champions, and there is a thriving community of subsidy reform advocates ready and willing to support them in their efforts. 
 
 
Stephen Kretzmann is Executive Director of Oil Change International. He has worked on energy and climate issues for more than twenty years. He served as an environmental advisor to the Movement for the Survival of the Ogoni People in Nigeria and has worked with communities and organizations around the world concerned with the environmental, social, and economic impacts of the energy industry. Since 1994 he has also represented various organizations at the United Nations Framework Convention on Climate Change.