May 31, 2022, New Delhi—Renewable energy subsidies in India have fallen by 59% to INR 6,767 crore after peaking at INR 16,312 crore in FY 2017 as deployment slowed during COVID-19 pandemic-induced lockdowns and grid-scale solar photovoltaic and wind achieved cost parity, according to a joint independent study released today by the Council on Energy, Environment and Water (CEEW) and the International Institute for Sustainable Development (IISD). To achieve the 2030 clean energy targets, more support—which may include subsidies—will be needed to scale up solar manufacturing, green hydrogen, and promising decentralized renewable energy technologies.
  
The report, titled Mapping India’s Energy Policy 2022: Aligning Support and Revenues with a Net-Zero Future, found that overall, India’s subsidies for fossil fuels, such as coal, oil, and gas, dropped notably by 72% to INR 68,226 crore during the 7 years between 2014 and 2021. However, fossil fuel subsidies in FY 2021 are still nine times higher than renewable energy subsidies. The country, therefore, needs to shift support away from fossil fuels and toward clean energy technologies to reach 500 GW of non-fossil power capacity by 2030 and net-zero emissions by 2070.

Overall, India provided over INR 540,000 crore to support the energy sector in FY 2021, including nearly INR 218,000 crore in the form of subsidies. Most notably, in May 2022, India reintroduced liquefied petroleum gas (LPG) subsidies for the beneficiaries of the Pradhan Mantri Ujjwala Yojna (PMUY) scheme in an attempt to target the subsidies to low-income consumers.

“The centre and the states must ensure adequate support and financing models for clean energy in the medium and long term, in line with India’s stated decarbonization goals. Our policy-makers should also find ways to offer affordable clean cooking energy to the poor and vulnerable sections. Targeted LPG subsidy in the short term is the only solution to ensure that the program goals of PMUY—which help pay the cost of using LPG for the first time—are not left by the wayside,” said co-author of the study Karthik Ganesan, Fellow and Director of Research Coordination at CEEW. 

The study further notes that electric vehicle (EV) subsidies have more than tripled since FY 2017 to INR 849 crore in FY 2021. During the year, India announced a production-linked incentive program to attract investments in domestic manufacturing of EVs and components. With manufacturing receiving a boost, clean energy financing will be the next step to further scale up deployment.

The report highlights that India’s non-banking financial companies are now playing a major role in shifting public finance away from fossil fuels, but as of today, no public finance institutions (PFIs) have established clear plans for phasing out finance for fossil fuels. In fact, annual disbursements by the largest PFIs were three times higher for fossil generation than renewable energy in FY 2021, according to the report. While several public sector undertakings (PSUs) announced new clean energy partnerships and targets, they need to set out clear strategies for adjusting business models to clean energy transition and net-zero, experts recommend.

“To accelerate the pace of India’s energy transition, public finance institutions need to increase the clean energy sector lending targets, in line with stated policy targets, and develop a medium- to long-term roadmap for phasing out public finance for fossil fuels and managing possible stranded assets,” said co-author of the report Swasti Raizada, Policy Advisor at IISD. “They should seek to swiftly end new public finance for coal-based power plants or mining to minimize the already high levels of exposure to fossil assets.” 

Media Contacts: 

Riddhima Sethi (CEEW) – [email protected]; +91 99020 39054
Swasti Raizada (IISD) – [email protected]

About CEEW

The Council on Energy, Environment and Water (CEEW) is one of Asia’s leading not-for-profit policy research institutions. The Council uses data, integrated analysis, and strategic outreach to explain—and change—the use, reuse, and misuse of resources. It prides itself on the independence of its high-quality research, develops partnerships with public and private institutions, and engages with the wider public. In 2021, CEEW once again featured extensively across 10 categories in the 2020 Global Go To Think Tank Index Report. The Council has also been consistently ranked among the world’s top climate change think tanks. Follow us on Twitter @CEEWIndia for the latest updates.

The study finds that, in the absence of large-scale carbon capture or removal, nearly 40% of developed fossil fuel reserves need to stay in the ground to keep the 1.5°C limit in reach.

The research provides the first complete assessment of committed or "locked-in" carbon dioxide emissions of existing and approved fossil fuel extraction facilities. It is the first peer-reviewed study that expands on the International Energy Agency’s (IEA) recent finding that no new coal mines or oil and gas fields can be developed under a 1.5°C warming limit.

"Our findings show that halting new extraction projects is a necessary step, but still not enough to stay within our rapidly dwindling carbon budget," said co-lead author, Greg Muttitt of the International Institute for Sustainable Development. "Some existing fossil fuel licences and production will need to be revoked and phased out early. Governments need to start tackling head-on how to do this in a fair and equitable way, which will require overcoming opposition from fossil fuel interests."

The team, led by researchers from Oil Change International and the International Institute for Sustainable Development, used a commercial database of over 25,000 oil and gas fields and developed a new dataset of coal mines across nine of the largest coal-producing countries. Using this data, they estimate that developed fields and mines could lead to cumulative carbon dioxide emissions of 936 Gt if their reserves are fully depleted and burned. These committed emissions are 60% larger than the remaining carbon budget for 1.5°C and exhaust the remaining budget for staying well below 2°C, the upper bound of the Paris Agreement.

The Intergovernmental Panel on Climate Change recently warned that some fossil fuel-burning infrastructure must be retired early to stay below 1.5°C. This new study finds that emissions "lock-in" from existing investments in fossil fuel extraction may be even larger, warranting equivalent policy attention. At the 26th Conference of the Parties (COP 26) climate summit in Glasgow, several governments launched the Beyond Oil & Gas Alliance, committing to end new licensing for oil and gas exploration and production—one of the necessary policy steps identified in the study.

"Our study reinforces that building new fossil fuel infrastructure is not a viable response to Russia’s war on Ukraine," said co-lead author Kelly Trout of Oil Change International. "The world has already tapped too much oil, gas, and coal. Developing more would either cause more dangerous levels of warming, if fully extracted, or create a larger scale of stranded assets."

The study finds that Russia, with its large developed reserves of oil, gas and coal, accounts for 13% of the global total. Almost 90% of developed fossil fuel reserves are located in just 20 countries, led by China, Russia, Saudi Arabia, and the United States, followed by Iran, India, Indonesia, Australia, Canada, and Iraq.

"As governments work to reduce their dependence on Russian oil, gas, and coal in response to the current crisis, they must recognize that developing new reserves elsewhere takes years and will not make up for short-term scarcity,” said co-author Roman Medelevitch of the Ӧko-Institut. “Where possible, governments should rather take advantage of scarcity price signals to push for sufficiency and efficiency measures and to promote renewable energy sources."

The study notes that, by ceasing to issue new licences or permits for fossil fuel exploration or extraction, governments could both avoid further entrenching legal and political barriers to mitigation policies and minimize stranded assets. “Each new coal mine, gas well, or oil field that is developed deepens political entanglement with the fossil fuel industry. Increasing the scale of extraction-related jobs and investments only makes it harder for governments to manage,” said co-author Thijs Van de Graaf from Ghent University.

“Our research should also be a warning sign for publicly listed companies and their investors that reserves that are on the books to be developed cannot be developed to stay below 1.5°C. Fossil fuel companies that claim to be aligned with the Paris Agreement and that need to transition their core businesses need to accelerate their transition plans,” said co-author Dimitri Lafleur of Global Climate Insights.

The study does not attempt to answer the question of which developed coal, oil, and gas reserves should be decommissioned and which "fit" within the 1.5°C carbon budget, noting that this requires grappling with questions of equity between and within countries. A recent paper by researchers at the Tyndall Centre for Climate Change Research found that the wealthiest, most economically diversified countries should phase out their oil and gas production by 2034 to facilitate an equitable global transition within the 1.5°C limit.

March 31, 2022—There is no need for South Africa to invest in a gas-to-power sector at this time and pushing ahead with such plans could negatively impact the country’s economy and climate, according to a new report by the International Institute for Sustainable Development (IISD) released today.

The study, titled Gas Pressure: Exploring the case for gas-fired power in South Africa, notes that developing an extensive gas-to-power sector in South Africa from scratch would involve significant investment in both gas supply infrastructure and power plants. 

Just to introduce the first 3000 MW of gas capacity and gas supply by 2030 could cost at least ZAR 47 billion—money that could ultimately be wasted as gas is squeezed out of the market by cheaper, low-carbon alternatives.

While gas was once seen as a necessary “transition fuel” in the shift away from coal power, rapid declines in the cost of renewable energy and battery storage technology have upended this view. The report found that renewables and storage should be the priority until at least 2030. 

“The risks associated with gas are increasing, while the alternatives to gas are rapidly improving. Since gas is not needed in the power sector until at least 2035, deliberations about the start of a gas-to-power sector should be shelved until at least 2030,” says Richard Halsey, a policy advisor at the IISD and co-author of the report. 

“When the government reassesses gas investments at the end of the decade, based on the availability and cost of alternative technologies such as green hydrogen, it is likely that there will be no logical role for gas in the mix.”

What’s more, the evidence suggests that gas investments would likely lead to higher energy costs for consumers, and additional just transition challenges for workers in the fossil fuel industry. And when considering methane emissions across the value chain, gas power could be as detrimental to the climate as coal.

Boosting renewables and battery storage capacity instead

The report argues that in an efficient energy mix, the majority (or bulk supply) of power should be as cheap as possible, while peaking plants should be used to cope with daily spikes in demand. Finally, balancing (or backup) power is needed to smooth out peaks and valleys of demand and supply.

Renewable energy—particularly wind and solar—is today easily the cheapest source of bulk supply, while battery storage is increasingly considered the most affordable, and widely deployable, new-build peaking technology.

In fact, the IISD authors found that wind and solar farms in South Africa are 57% cheaper* than combined-cycle gas plants for bulk electricity supply, while 3-hour battery storage is 30% cheaper* than simple cycle gas plants for covering peak power demand. South Africa’s existing electricity system, which mostly runs on coal power, can also provide some of the balancing function in the short to medium term. 

According to the report, significantly increasing renewables and storage capacity can address power system challenges that lead to frequent load shedding—the rotational power cuts by state-owned utility Eskom to maintain overall grid stability.

“To solve load shedding as quickly as possible, and to build the foundation of an optimal, low-cost future energy mix, South Africa should significantly ramp up its investments in solar, wind, storage, and technologies that integrate renewables into the grid,” says Halsey. “Since renewables contribute only a small part of the electricity mix, a combination of existing pumped storage, liquid fuel generators, grid integration methods, and the remaining coal fleet can provide the balancing function for at least the next 13 years.”

To artificially stimulate local demand for gas, South Africa’s Department of Mineral Resources and Energy has proposed establishing a gas-to-power sector.

“Based on system analysis, this would be a costly mistake,” says Halsey. “We strongly believe that a moratorium should be placed on the development of the gas-to-power sector, and further research should be done to better understand how advances in alternatives to gas will affect the optimal energy mix .” 

*based on Levelised Cost of Energy Analysis—a measure of what it costs to produce a unit of energy when the full lifecycle costs are taken into account.

Media Contacts

Richard Halsey, Policy Advisor, IISD: [email protected]
Richard Bridle, Senior Policy Advisor, IISD: [email protected]

Rich countries must end oil and gas production by 2034 to keep the world on track for 1.5°C and give poorer nations longer to replace their income from fossil fuel production, finds a new report from a leading climate scientist at the University of Manchester released today.

It proposes different phaseout dates for oil- and gas-producing countries in line with the Paris Agreement’s goals and commitment to a fair transition. Taking into account countries’ differing levels of wealth, development and economic reliance on fossil fuels, it says the poorest nations should be given until 2050 to end production but will also need significant financial support to transition their economies.

The report, by Professor Kevin Anderson, a leading researcher at the Tyndall Centre for Climate Change Research, and Dr Dan Calverley, warns that there is no room for any nation to increase production, with all having to make significant cuts this decade. The richest, which produce over a third of the world’s oil and gas, must cut output by 74% by 2030; the poorest, which supply just one ninth of global demand, must cut back by 14%.

Kevin Anderson, Professor of Energy and Climate Change at the University of Manchester, said: “Responding to the ongoing climate emergency requires a rapid shift away from a fossil fuel economy, but this must be done fairly. There are huge differences in the ability of countries to end oil and gas production, while maintaining vibrant economies and delivering a just transition for their citizens.  We have developed a schedule for phasing out oil and gas production that – with sufficient support for developing countries – meets our very challenging climate commitments and does so in a fair way.

“The research was completed prior to Russia’s invasion of Ukraine. Our first thoughts are with the Ukrainian people and indeed with all of those caught up in the war. But the resulting high energy prices also remind us that oil and gas are volatile global commodities, and economies that depend on them will continue to face repeated shocks and disruption. The efficient and sensible use of energy combined with a rapid shift to renewables will increase energy security, build resilient economies, and help avoid the worst impacts of climate change.”

The report, commissioned by the International Institute for Sustainable Development, notes that some poorer nations are so reliant on fossil fuel revenues that rapidly removing this income could threaten their political stability. Countries like South Sudan, Congo-Brazzaville, and Gabon, despite being small producers, have little economic revenue apart from oil and gas production. 

By contrast, it observes: “Wealthy nations that are major producers, typically remain wealthy even once the oil and gas revenue is removed.” Oil and gas revenue contribute 8% to US GDP, but without it, the country’s GDP per head would still be around USD 60,000 – the second highest globally.

A flagship report from the Intergovernmental Panel on Climate Change (IPCC) warned last month that failing to limit global warming to 1.5°C would have devastating global impacts. The UN Secretary-General Antόnio Guterres described it as “an atlas of human suffering and a damning indictment of failed climate leadership.” At current levels of emissions, the world will exceed 1.5°C as early as 2030 to 2035.

When countries signed the UN Paris Agreement, they agreed that wealthy nations should take bigger and faster steps to decarbonise their economies and also provide financial support to help poorer countries move away from fossil fuels. This principle has been applied to coal power generation, with the UN calling on wealthy OECD countries to phase out coal use by 2030 and the rest of the world by 2040.

The report, Phaseout Pathways for Fossil Fuel Production, applies similar principles to oil and gas. It quantifies how much future production is consistent with the Paris climate targets and what this implies for the 88 countries responsible for 99.97% of all oil and gas supply. It sets viable phaseout pathways for five different groups of countries based on their differing capacities to make a rapid and just transition away from fossil fuels. 

For a 50% chance of limiting the global temperature rise to 1.5°C, it finds that:

• 19 Highest-Capacity countries, with average non-oil GDP per person (GDP/capita) of over USD 50,000, must end production by 2034, with a 74% cut by 2030. This group produces 35% of global oil and gas and includes the USA, UK, Norway, Canada, Australia and the United Arab Emirates.
• 14 High-Capacity countries, with average non-oil GDP/capita of nearly USD 28,000, must end production by 2039, with a 43% cut by 2030. They produce 30% of global oil and gas and include Saudi Arabia, Kuwait and Kazakhstan.
• 11 Medium-Capacity countries, with average non-oil GDP/capita of USD 17,000, must end production by 2043, with a 28% cut by 2030. They produce 11% of global oil and gas and include China, Brazil and Mexico.
• 19 Low-Capacity countries, with average non-oil GDP/capita of USD 10,000, must end production by 2045, with an 18% cut by 2030. They produce 13% of global oil and gas and include Indonesia, Iran and Egypt.
• 25 Lowest-Capacity countries, with average non-oil GDP/capita of USD 3,600, must end production by 2050 with a 14% cut by 2030. They produce 11% of global oil and gas and include Iraq, Libya, Angola and South Sudan.
• See Notes to Editors for full table

Dr Dan Calverley said: “There is very little room for manoeuvre if we want to limit warming to 1.5°C. Although this schedule gives poorer countries longer to phase out oil and gas production, they will be hit hard by the loss of income. An equitable transition will require substantial levels of financial assistance for poorer producers, so they can meet their development needs while they switch to low-carbon economies and deal with growing climate impacts.”

The report also offers a more ambitious scenario with a 67% chance of meeting 1.5°C. This would require the richest countries to end oil and gas production by 2031 and the poorest by 2042.

In a less ambitious scenario, with a 50% chance of meeting 1.7°C – reflecting “well below 2 degrees” – the richest countries would have to halve oil and gas production by 2035 and end it by 2045. The poorest countries would have until 2062 to phase out all production, but there would still be no room for additional oil and gas production.

Commenting on the report, Connie Hedegaard, former European Commissioner for Climate Action and Danish Minister for Climate and Energy, said: “While it is largely understood that there needs to be an urgent phaseout of coal production globally, this report illustrates only too clearly why there also needs to be a phaseout of oil and gas production. And it shows that the pace and end date of the wind-down needs to be rapid. This urgency has only been tragically underscored by recent geopolitical events, which have made it abundantly clear that there are numerous reasons why the world needs to get off its dependence on fossil fuels and accelerate the transition to clean energy.”

Saber H. Chowdhury, Member of the Bangladesh Parliament and Honorary President of the Inter-Parliamentary Union, said: “The science is conclusive – fossil fuels need to be phased out now and a fossil fuel-free future world realised soon. Wealthy nations have the means to transition fastest and have a moral duty to do this. At the same time, they have an obligation to support countries in the global south with finance and technology to assist them in transitioning to renewables to secure their energy needs.”

The analysis assesses countries’ capacity to fund a fair transition away from fossil-fuelled economies based on their “non-oil GDP per person” – GDP after revenue from oil and gas production is subtracted. This approach recognises that oil and gas revenue plays a much less important role in some countries’ economies – including some major producers – than in others.

It distributes the remaining global carbon budget between producer nations according to current levels of production and how far countries are above or below the average “capacity to fund a just transition.” Nations that are both poor and highly reliant on oil and gas revenue are given longer to phase out production than wealthier nations with more diverse economies.

The proposed schedules for winding down oil and gas production depend on a rapid global phaseout of coal. The report notes that many poorer countries rely on domestic coal production for their energy needs: nearly three quarters of all the world’s coal is produced and consumed in developing countries. However, to achieve 1.5°C without even tighter reductions on oil and gas, coal production must peak in developing countries by 2022 and end by 2040, while developed countries must phase out all coal production by 2030.

ENDS

For further information and to arrange interviews, please contact:

David Mason         [email protected]             +44 7799 072320
Maria Dolben        [email protected]             +44 7408 809839

Notes To Editors

About the Authors

Prof Kevin Anderson is Professor of Energy and Climate Change at the University of Manchester (UK), Uppsala University (Sweden) and the University of Bergen (Norway). Formerly the director of the Tyndall Centre for Climate Change Research, he engages widely with governments and remains research active with publications in Climate Policy, Nature and Science. Kevin has a decade of industrial experience in the petrochemical industry and is a chartered engineer and fellow of the Institution of Mechanical Engineers.
 
Dr Dan Calverley is an independent researcher who previously worked at the Tyndall Centre for Climate Change Research. He has a PhD in energy and climate change from the University of Manchester.

About the International Institute for Sustainable Development

The International Institute for Sustainable Development (IISD) is an award-winning independent think tank working to accelerate solutions for a stable climate, sustainable resource management, and fair economies. Our work inspires better decisions and sparks meaningful action to help people and the planet thrive. We shine a light on what can be achieved when governments, businesses, non-profits, and communities come together. 

Comment on the Report

Christiana Figueres, founding partner of Global Optimism and former Executive Secretary of the UN Framework Convention on Climate Change, said: “The recent IPCC report is a grim warning of the dangers of exceeding the 1.5°C limit. This new study is a timely reminder that all countries must phase out oil and gas production rapidly with wealthy countries going fastest, while also ensuring a just transition for workers and communities that rely on it. Additionally, wealthy countries can and must provide the support and resources less wealthy countries need to make the same transition.”

Lidy Nacpil, coordinator of the Asian People’s Movement on Debt and Development and co-coordinator of the Global Campaign to Demand Climate Justice, said: “The carbon budget has been largely depleted by the rich countries that have benefited most from fossil fuel extraction and is now much too small to allocate it fairly. A rapid, just and equitable phaseout of oil and gas is still possible, with the time frames suggested in this report, as long as rich countries provide substantial financial, technical, and political support, and cancel the debt.”

Oil and gas phaseout pathways in line with a 50% chance of limiting climate change to 1.5°C

A series of promising new climate pledges aimed at tackling fossil fuel emissions were announced in Glasgow last November. But as governments start taking actions to implement new climate mitigation policies, the looming threat of expensive investment arbitration claims under the Energy Charter Treaty is putting these efforts at risk.

The 26th United Nations Climate Change Conference of the Parties (COP 26) led to commitments to phase out coal, halt new drilling for oil and gas reserves, and reduce global methane emissions. But new analysis from the International Institute for Sustainable Development (IISD) indicates that this progress could be undermined by the Energy Charter Treaty.

While the Energy Charter Treaty was developed in the 1990s to enable multilateral cooperation in the energy sector in the wake of the Cold War, its signatories now recognize it is poorly aligned with their climate ambitions. An emerging body of research, including a recent IISD study, shows that the treaty is being used more and more frequently by fossil fuel investors to mitigate the losses they incur from climate policies. The result? Policies aimed at transitioning to a low-carbon economy are at risk of triggering arbitration claims that cost governments on average over USD 600 million—almost five times the amount awarded in non-fossil fuel cases.

As negotiators reconvene this week to continue discussions on modernizing the treaty with the goal of clinching a deal by June, IISD’s new article highlights just how critical these talks are for the future of the COP 26 pledges. “The Energy Charter Treaty needs a major overhaul to safeguard the progress made at COP 26,” said Lukas Schaugg, co-author of the article and International Law Analyst at IISD. “Unless real changes are made, states need to be ready to withdraw from the treaty entirely.”

Kyla Tienhaara, Canada Research Chair in Economy and Environment at Queen’s University, has researched the conflicts between investment treaties and environmental policies. Her message is clear: “We need to strike down legal barriers to climate action, and the Energy Charter Treaty—as it stands today—is a major one.”

For more information

For more information or to conduct an interview with one of the researchers, please contact: [email protected] 

About the article

How the Energy Charter Treaty Risks Undermining the Outcomes of COP 26 was written by IISD’s Lukas Schaugg, International Law Analyst, and Greg Muttitt, Senior Policy Adviser, Energy Supply. It analyzes the investment arbitration risks posed by the Energy Charter Treaty for the following three climate pledges made during COP 26: commitments to phase out coal, the Beyond Oil and Gas Alliance (BOGA) initiative, and the Global Methane Pledge.

February 25, 2022—Indonesia should quadruple its annual investment target for new and renewable energy to over USD 8 billion by 2025, according to a new brief by the International Institute for Sustainable Development (IISD). The country needs to take concrete measures to attract private investments in low-carbon energy and meet its net-zero climate goals, the report finds.

The country spent USD 1.51* billion on renewable energy in 2021, just 20% of what it needs to invest each year from 2021–2025 to reach 23% of new and renewable energy in the energy mix by 2025, the brief Using Public Funding to Attract Private Investment in Renewable Energy in Indonesia found.

IISD experts urge Indonesia to remove roadblocks to mobilize private investments in renewable energy, which will be crucial to meet its climate goals. With the Ministry of Energy and Mineral Resources projecting that USD 37 billion would be required by 2025 to reach the 23% target, the country now needs to invest over USD 8 billion each year. And yet, the government currently targets USD 2.1 billion average annual investments.

“Indonesia must act now to incentivize private investments and reverse the current trend, especially because supporting renewable energy development can significantly contribute to post-COVID-19 recovery and green transition,” says Theresia Betty Sumarno, lead author of the brief.

“The government’s annual renewable investment targets are at odds with its renewable capacity goals. At the current rate of investment, Indonesia risks missing 23% of new and renewable energy by 2025,” warns Sumarno.

To mobilize private investments in green energy, Indonesia must increase the clarity and traceability of current financial flows and allocation of public financing for renewable energy projects to boost private investor confidence and gain trust from international funders, findings suggest. 

The government can effectively leverage national and international public funding in the energy sector through public funding institutions—such as Indonesia Infrastructure Guarantee Fund (PT IIGF), PT Sarana Multi Infrastructure (PT SMI), and PT Indonesia Infrastructure Finance (PT IIF). These institutions should be used further to accelerate renewable energy development in the country, the brief argues.

What’s more, the country needs to improve the certainty of policies to mobilize investments, such as by implementing renewable energy support mechanisms like feed-in tariffs, experts recommend.

The report also highlights the role that state-owned energy enterprises should play to accelerate Indonesia’s renewable energy development. By requiring certain investment conditions, the government should make sure that national energy firms—including the electricity company PT Perusahaan Listrik Negara (PLN) and the oil company PT Pertamina—more closely align their strategies with established national climate targets.

Experts assert that Indonesia should prioritize investments in solar and wind power which today account for just a fraction of renewable energy capacity and investments, currently dominated by geothermal energy.

With Indonesia holding the G20 Presidency this year, the government has an opportunity to put sustainable recovery and clean energy transition on the agenda.
 
“Indonesia should take advantage of its G20 Presidency to lead by example and mark a real shift towards clean energy that will benefit the local economy and help the country achieve its net-zero goals,” says Lourdes Sanchez of IISD.

*Source: Ministry of Energy and Mineral Resources

Media Contacts

Theresia Betty Sumarno, Energy Policy Consultant, IISD: [email protected]
Lourdes Sanchez, Senior Policy Advisor and Lead Indonesia, IISD: [email protected]

February 23, 2022, Winnipeg, Canada—As world governments struggle to agree on united responses to environmental crises, a reporting team is marking three decades revealing the details of negotiations and which countries have advanced action or built roadblocks.

Founded on 2 March 1992, the Earth Negotiations Bulletin (ENB) is a balanced, timely, neutral reporting service that attends and tracks more than 35 intergovernmental negotiating processes—including climate change, biodiversity restoration, and chemicals governance. Acting as a concise “paper of record” of environmental talks, ENB’s nuanced reports support policymakers, media, researchers, and activists trying to track what countries say in environmental negotiating rooms around the world.

“The need for transparency has only grown,” says Dr. Pamela Chasek, Executive Editor of ENB. As a doctoral student preparing for the 1992 United Nations Conference on Environment and Development in Rio de Janeiro, she cofounded the publication with Johannah Bernstein, an environmental lawyer, and Langston James ‘Kimo’ Goree VI, a former UNDP programme officer and NGO activist from the Western Amazon. “The world’s linked environmental problems are getting worse, with impacts hitting the Global South hardest. Some governments are trying to act together at the scale and speed necessary, and it is crucial people understand how those decisions are being made or slowed on their behalf.”

This year could feature a number of those decisions, as diplomats try to resume in-person talks amid shifting waves of COVID-19 infections and unequal access to vaccines. Highlights for 2022 may include:

• Launch of negotiations for a marine plastics treaty
• Launch of negotiations for a science-policy body (like IPCC or IPBES) for chemicals
• Adoption of a global biodiversity framework, with targets to slow and reverse biodiversity loss
• Adoption of a legally binding instrument to protect high seas biodiversity

“Amid the climate crisis, all countries must have access to these negotiations,” says Dr. Richard Florizone, President and CEO of the International Institute for Sustainable Development (IISD), which has housed ENB since 1992. “Especially people in developing countries and small island nations who have the most at stake and the fewest negotiators at these talks. We’re deeply grateful to the founders for an idea that only grows in importance.”

For media inquiries, interviews, and archival photos, please contact

Matthew TenBruggencate, Senior Communications Officer, IISD, [email protected]

February 15, 2022, Ottawa—Provincial governments are still providing billions of dollars to prop up fossil fuels, concludes a new report from the International Institute for Sustainable Development (IISD) tallying subsidies in Canada’s four major oil and gas producing provinces.

While Canada’s federal government has pledged to phase-out its fossil fuel subsidies by 2023—which totaled at least CAD 1.9 billion in 2020—provincial governments have yet to make similar commitments. If left unaddressed, IISD experts say this will be a major roadblock to meeting the country’s net-zero target. 

“Fossil fuels are the biggest cause of Canada’s climate pollution, and subsidies drive up oil and gas production and use,” says Vanessa Corkal of IISD, one of the authors of Blocking Ambition: Fossil fuel subsidies in Alberta, British Columbia, Saskatchewan, and Newfoundland & Labrador. “Provinces need to stop using these subsidies to delay the energy transition that’s already underway, and instead seize the benefits of proactively building a cleaner economy.”

According to the report, this means not creating any new fossil fuel subsidies, phasing out existing subsidies by 2023, and increasing the transparency of provincial subsidy data. Instead, in 2020 and 2021, provinces doubled down on fossil fuel subsidies as a pandemic recovery strategy despite the economic and climate risks. 

Specifically, the report finds that Alberta provided a total of CAD 1.3 billion in fossil fuel subsidies last fiscal year. During this period, the Alberta government also disbursed $400 million from its Technology, Innovation and Emissions Reduction (TIER) Fund—a program meant to reduce industrial greenhouse gas emissions—to incentivize fossil fuel production, IISD experts say, including through subsidies for controversial carbon capture technology.

Meanwhile, British Columbia provided CAD 765 million in fossil fuel subsidies, largely for continued support of liquified natural gas that the report says risks undermining positive climate progress, such as efforts outlined in the CleanBC plan. Public surveys indicate that the majority of British Columbians are opposed to these subsidies, deeming the province's oil and gas royalty program—which is currently undergoing review—outdated and in need of reform. 

In Saskatchewan, the report uncovered CAD 409 million in fossil fuel subsidies over this period, noting that the province introduced several new subsidies in recent years, including drilling incentives for producers.

Turning to the East Coast, the research shows that Newfoundland and Labrador’s government increased fossil fuel subsidies last fiscal year, reaching CAD 82.6 million. In addition, the report states that recent changes to the royalty structure for the Terra Nova oil field will cost Newfoundland taxpayers another CAD 300 million over the lifespan of the project.

“Canadians need governments at all levels to step up and work together to protect citizens from the increasingly dangerous impacts of a changing climate,” says Corkal. “Cooperation and action on fossil fuel subsidy reform is more important than ever.”

For media inquiries, please contact:

Charly Blais, Communications Officer, IISD Energy, [email protected]
 

January 31, 2022—Energy subsidies in South Africa more than tripled between FY2017 and FY2020 to ZAR 172 billion (USD 10.4 billion), with the highest subsidies allocated to fossil fuels, including coal-fired electricity, according to a new report from the International Institute for Sustainable Development (IISD) released today.

The government spent nearly ZAR 67 billion on bailouts for carbon-intensive companies, particularly the state-owned utility Eskom, as well as ZAR 43 billion to support the oil and gas industry, found the report, titled South Africa’s Energy Fiscal Policies: An inventory of subsidies, taxes and policies impacting the energy transition. In addition, carbon tax exemptions cost South Africa a further ZAR 45 billion in lost tax revenues.

In total, the data shows that energy subsidies more than tripled from the ZAR 58 billion allocated in FY2017. At ZAR 172 billion, the government’s expenditure on energy subsidies in 2020 exceeds the country’s annual spending on police services and defense & state security, combined.

“Fiscal policies—subsidies, taxes, and grants—are key tools that governments can use to reach their energy and climate targets, but right now in South Africa, billions are spent propping up the existing fossil fuel system,” says IISD’s Chido Muzondo, co-author of the report. “These subsidies represent an enormous cost to the public budget and take a heavy toll on people’s health and the climate.”

IISD experts found that pollution from fossil fuel use costs South Africans ZAR 550 billion each year in environmental harm and damage to public health.

The study, which explores the extent to which South Africa’s current energy fiscal policies reflect its goal to develop a robust, low-carbon, and affordable domestic energy system, highlights that current policies are not in line with the country’s energy targets and environmental imperatives. The report’s authors provide concrete recommendations for the government to realign its fiscal policies by reforming fossil fuels subsidies and increasing investments in clean energy.

To stop the trend of rising subsidies, the government must tie bailouts to the energy transition and phase out carbon tax exemptions, particularly in the electricity sector, IISD experts recommend.

South Africa should also raise fossil fuel taxes, according to the report, and—to keep pace with growing power demand—boost investments in renewable energy, and explore alternative business models for large-scale renewables.

“On top of discouraging consumption, revenue generated by increasing fossil fuel taxes can be invested in the energy transition in ways that stimulate jobs, economic growth, and fund a just transition for coal workers and communities,” says study co-author Richard Bridle of IISD. “It can also be used to provide targeted support for vulnerable households.”

IISD experts also urge South Africa to improve transparency on energy fiscal policies to send a strong signal to market players and spur the advancement of the clean energy transition.

Media Contacts

Chido Muzondo, Policy Advisor, IISD: [email protected]
Richard Bridle, Senior Policy Advisor, IISD: [email protected]

As one of the world’s most controversial international investment agreements on energy cooperation is put back under scrutiny this week, new research from the International Institute for Sustainable Development (IISD) highlights what could be at stake for climate action.

Negotiators are gathering virtually from January 18-21 to discuss modernizing the Energy Charter Treaty—an accord developed in the 1990s to enable multilateral cooperation in the energy sector. Given the protection the treaty provides to foreign fossil fuel investments, it is now widely seen as an obstacle to the transition to a low-carbon economy.

IISD’s new report emphasizes what is in the balance in these negotiations. It analyzes the trends in investor–state disputes initiated by investors in the fossil fuel industry. The findings show that the fossil fuel industry uses investor-state arbitration more than any other sector, and that arbitration claims challenging environmental measures are on the rise.

“The fossil fuel industry is behind a fifth of all known investor-state dispute settlement cases,” said Lea Di Salvatore, the report’s author and PhD researcher at the University of Nottingham School of Law. “Most of these cases are decided in favour of investors, and the average amount awarded is almost five times the amount awarded in non-fossil fuel cases. The Energy Charter Treaty helps facilitate this, it is the most employed international investment agreement in fossil fuel arbitrations.”

The recent but growing trend of investment arbitrations initiated by the fossil fuel industry to counteract environmental measures threatens progress made by world leaders to commit to more ambitious climate pledges at the 26th United Nations Climate Change Conference in Glasgow last November.

“We are on the cusp of a new wave of investor-state arbitration that is more and more in conflict with our efforts to protect the environment,” said Nathalie Bernasconi-Osterwalder, Executive Director of IISD Europe and Senior Director of IISD’s Economic Law and Policy Program. “It is threatening to make the implementation of critical climate action crushingly expensive, unless states take prompt action to reform or withdraw from the investment treaties on which these arbitrations are based.”

For more information

For more information, or to conduct an interview with one of the researchers, please contact: [email protected] 

About the report

Investor–State Disputes in the Fossil Fuel Industry by Lea Di Salvatore analyzes the trends in investor–state disputes initiated by investors in the fossil fuel industry to understand the extent to which this industry relies on investor-state dispute settlement (ISDS) to protect its investments. It identifies and examines 231 known investment arbitrations related to fossil fuels, which account for 20% of the total known ISDS cases across all sectors. The findings suggest that the fossil fuel industry has been using the ISDS system extensively to protect its investments, with a rising trend in arbitrations to counteract critical environmental measures.