Fanning the Flames: G20 provides record financial support for fossil fuels
This digital story provides the latest evidence regarding the extent to which the G20, as a whole, has made progress in aligning public financial flows with the need to reduce greenhouse gas emissions. The first four sections cover the main types of support for fossil fuels: subsidies, investments by state-owned enterprises, lending from public financial institutions, and under-taxation. The final two sections examine progress on renewable energy subsidies and investments. Each section contains recommendations for the G20.
The 2022 energy price crisis catapulted public financial support for fossil fuels to new levels. G20 governments were quick to cushion the effects of peaking fossil fuel prices and bolster energy supplies, providing a staggering USD 1.4 trillion in the form of subsidies (USD 1 trillion), investments by state-owned enterprises (USD 322 billion), and lending from public financial institutions (USD 50 billion). While much of this was support for consumers, around one third (USD 440 billion) was driving investment in new fossil fuel production. This support perpetuates the world’s reliance on fossil fuels, paving the way for yet more energy crises due to market volatility and geopolitical security risks. It also severely limits the possibilities of achieving climate objectives set by the Paris Agreement by incentivizing greenhouse gas emissions while undermining the cost-competitiveness of clean energy. G20 governments need to shift their financial resources away from fossil fuels to instead provide targeted, sustainable support for social protection and the scaling-up of clean energy.
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