Resource-rich countries compete to attract mining investment but run the risk of offering poorly designed tax incentives.

The use of poorly designed tax holidays in mining leads countries to forgo vital revenues in exchange for unknown benefits—revenues which are needed to fund public services and infrastructure.

This paper highlights key findings from an analysis of the IGF Mining Tax Incentives Database, a collection of files comparing the fiscal regimes of 104 mining projects across 21 countries.

The database is the first large-scale, systematic attempt to compile tax incentives used by developing country governments to attract mining  investment. It is also the first public effort to bring together incentives granted in mining contracts.

This is made possible through greater contract transparency—in particular, the availability of resource contracts compiled by the Natural Resource Governance Institute (NRGI), Columbia Center on Sustainable Investment (CCSI), the World Bank and Open Oil.

Voluntary Sustainability Certification (VSC) has grown rapidly in Kenya over the past decade, driven by significant buyer demand for Rainforest Alliance (RA) certification.

This development has been coupled with rapid growth in participation in the Fair Trade and the former UTZ programs (now merged with RA), a dynamic that has brought opportunities and challenges for the tea sector.

To address these issues, the facilitating organizations (Kenya Tea Directorate, Sustainable Inclusive  Business/KEPSA, and the International Institute for Sustainable Development [IISD]), through the support of the Swedish International Development Agency (SIDA) convened key representatives from all segments of the Kenyan tea value chain for a multistakeholder meeting of the sector, held on March 6, 2019, in Nairobi, Kenya.

Voluntary Sustainability Certification (VSC) is increasingly affecting the Rwandan coffee sector, presenting both valuable opportunities and noteworthy challenges.

Through a four-year program supported by the Swedish Government (SIDA), the International Institute for Sustainable Development (IISD) is establishing advisory services on VSC in producing countries based on their information and capacity-building needs, with the objective of supporting informed decision making among sector stakeholders.

This workshop was held February 28, 2019, co-facilitated by IISD, the National Agricultural Export Development Board (NAEB), and Sustainable Growers in Kigali, Rwanda.

Key Messages

• Modelling across 26 countries finds a simple national average of 6 per cent greenhouse gas (GHG) emission reductions when subsidies to fossil fuels are removed. This average reduction improves to 13.2 per cent with a modest fossil fuel tax and a switch from savings and revenues into renewables and energy efficiency.
• Global GHG emission reductions from fossil fuel subsidy reform (FFSR) range between 6.4 and 8.2 per cent by 2050 according to a review of 60 papers concerned with FFSR and fossil fuel and carbon taxation.
• Countries can consider FFSR or fossil fuel taxation, with swaps toward sustainable energy within second-generation Nationally Determined Contributions.

This working paper models the impact of the removal of fossil fuel subsidies on greenhouse gas (GHG) emission reductions for the following countries: Algeria, Bangladesh, Brazil, China, Egypt, Germany, Ghana, India, Indonesia, Iran, Iraq, Mexico, Morocco, Myanmar, Nigeria, Pakistan, Russia, Saudi Arabia, South Africa, Sri Lanka, Tunisia, United Arab Emirates, the United States, Venezuela, Vietnam and Zambia. The research found simple country average GHG emission reductions of 6 per cent from 2018 until 2025, compared to business as usual. With an additional 10 per cent energy tax from 2025 until 2030 and a shift of 30 per cent of the savings from reforms and of revenues from taxation into investments in renewable energy and energy efficiency (i.e., a swap), GHG emission reductions improve to an average of 13.2 per cent by 2030. Cumulative fiscal savings from fossil fuel subsidy reform (FFSR)  alone by 2030 total USD 2.56 trillion across the countries analyzed, with total cumulative GHG emissions abated from FFSR of 4.8 GtCO₂e by 2030. For every tonne of CO₂e removed through FFSR, governments save an average of USD 93.

This study also includes a literature review of 60 pieces of research on global GHG emission reductions stemming from negative and positive carbon pricing. We reviewed 40 papers concerned with FFSR and 20 papers focused on fossil fuel energy or carbon taxation. Our review found that global studies of fossil fuel subsidy removal result in emission reductions of between 1 and 10 per cent by 2030 and between 6.4 and 8.2 per cent by 2050. Removing fossil fuel subsidies and applying appropriate taxation could reduce emissions by a much larger 28 per cent globally. Fossil fuel subsidies act as a negative carbon price and could also be considered along with carbon pricing discussions. Furthermore, governments could consider the co-benefits of GHG emission reductions from FFSR and taxation, and include these policies within second-generation Nationally Determined Contributions.

Mensajes claves

• El ingreso por extracción de combustibles fósiles en México ha caído en los últimos años. Por el contrario, los ingresos por consumo de combustibles fósiles adquieren una mayor importancia. Se recomienda que el país utilice estos ingresos pensando en el mañana, realizando un análisis de costo-beneficio de la estrategia de continuar con la extracción y consumo de combustibles fósiles y evaluando alternativas (como las renovables) que consideren la óptima utilización de los recursos fiscales y las metas de desarrollo social y climáticas.
• México puede mejorar la transparencia de los ingresos fiscales por el sector de los hidrocarburos y el carbón.
• Es importante destinar más recursos a la transición energética hacia renovables y eficiencia energética como parte de los objetivos de bienestar y de desarrollo sostenible.
• En el tema de subsidios, se recomienda evitar establecer subsidios generalizados que han demostrado ser una política regresiva que termina por beneficiar a los grupos que menos lo necesitan y con un alto costo de oportunidad.

En México, la nueva administración de Andrés Manuel López Obrador busca reforzar el sector de hidrocarburos e incrementar la extracción de petróleo y producción nacional de gasolinas para promover la seguridad energética del país. Esto supone una serie de retos medioambientales, sociales y económicos que pueden tener impactos importantes en la transición energética.

Este reporte presenta algunos de los indicadores más relevantes para comprender cómo se relaciona la aportación fiscal de la extracción y el consumo de los combustibles fósiles e identifica varias áreas de oportunidad para acelerar la transición energética en México.

Key Messages

• G20 countries have a critical role to play in leading efforts to combat climate change, as they account for 79 per cent of global greenhouse gas emissions. In 2009, they committed to phasing out fossil fuel subsidies in the medium term, and since then many have played an important role in driving forward climate action internationally. 
•  A decade on from this commitment, G20 governments continue to provide billions of dollars of support for the production and consumption of fossil fuels, spending at least USD 63.9 billion per year on coal alone, the most polluting fossil fuel. They have also neglected to define or document the full extent of their subsidies. 

This research tracks each G20 country’s progress in phasing out subsidies to the production and consumption of coal (including coal-fired power), looking at fiscal support, public finance and state-owned enterprise investment. The report summarizes key findings from 18 parallel country briefs, with accompanying data sheets that list all the support identified for each country. 

This report builds on the broad recognition that corruption—with bribery as a particularly significant manifestation—is a grave threat to sustainable development.

It focuses on Canadian legal initiatives against bribery by Canadian businesses investing abroad. By digging into both domestic and international law, the policy brief identifies four key points of interest to sustainable development stakeholders: (1) a spike in enforcement of Canada’s Foreign Bribery Prohibition; (2) the recent expansion of firm-level anti-bribery compliance requirements; (3) the adoption of mandatory payment transparency rules for extractive industry firms; and (4) the Canadian government’s stated goal to move to a “progressive” trade (and investment) agenda.

The first key development pertains to Canada’s prohibition of foreign bribery, as mandated by the Organisation for Economic Co-operation and Development Convention on Combatting Bribery of Foreign Officials (OECD Convention). The paper begins by examining Canada’s mixed record in implementing this prohibition approach and the recent focus on enforcement.

The second and third developments aim at shifting away from simple prohibition toward reducing the risk of bribery. To date, this has taken two general forms. Canadian corporations are expected, in an increasingly wide range of circumstances, to implement risk-mitigation best practices through accounting protocols and compliance systems. Furthermore, in the case of extractive sector firms, industry-specific concerns are now addressed through mandatory payment transparency.

The fourth key development is Canada’s stated goal for adopting a “progressive” trade and investment policy. This should include a path towards global leadership for Canada in combatting corruption through international investment law. Global Affairs Canada has recently conducted a public consultation on its international investment agreements. There is a need for a new model Foreign Investment Promotion and Protection Agreement (FIPA) that will address issues beyond investment protection, including the tackling of corruption.

In Manitoba, Canada, and indeed all over the world, policy-makers grapple with the costs of maintaining natural ecosystems, including wetlands, forests, protected areas, etc.

As public budgets diminish, decision makers are often viewing such spending as a luxury that can be ill afforded, especially in light of other seemingly more urgent upgrades in mobility, healthcare, education, transport, social housing and the like.

However, natural ecosystems provide a range of “services”—that is, ecosystem services—such as storing water, supplying water, protecting against floods, preventing erosion, reducing the impacts of heat and drought, reducing air pollution, reducing noise pollution and improving aesthetics. With the advent of climate change, natural ecosystems are also critical, as they serve as buffers against catastrophic weather and the resulting floods, droughts, landslides and forest fires.

However, what is the financial value of these “services”? Also, if policy-makers, investors and citizens were better informed on these services and their values, would it support the conservation and regeneration of natural habitats? Alternatively, to put it another way, would citizens, businesses, industries, investors and governments be ready to spend on maintaining natural ecosystems if there were more predictability and certainty about the services natural ecosystems can provide?

This SAVi assessment responds to these questions. It gives a valuation of the ecosystem services provided by examples of built and natural infrastructure: (i) Stephenfield Reservoir is a civil engineered reservoir that was built for irrigation and domestic water supply; and (2) Pelly’s Lake is a natural wetland that is being actively managed for flood control.

Their added benefits are related to improved habitat and biodiversity, groundwater recharge, nutrient and sediment sequestration, carbon offsets and various economic uses of the biomass (plant material). From there, the assessment values the cost of the grey infrastructure that would be needed to provide the same level of service.

Reallocating some of the savings from fossil fuel subsidy reform to fund the clean energy transition can bring in economic, social and environmental benefits.

Key Messages

• This report presents the case for a "subsidy swap"—reallocating some of the savings from fossil fuel subsidy reform to fund the clean energy transition.

• Fossil fuel to clean energy subsidy swaps are already taking place. Globally, fossil fuel subsidies have fallen and global investments in renewable energy have exceeded investments in fossil fuels since 2008. Renewable global installed capacity additions have exceeded fossil fuel generation since 2014.

• The report shares examples of four countries—India, Indonesia, Zambia and Morocco—that have already been taking concrete action and leading the way by implementing fossil fuel to clean energy swaps. Sharing these experiences is a key tool to show how swaps can be a feasible option for other countries.

When governments reform fossil fuel subsidies, there are many competing demands for how to reallocate resources, including spending on public health, education and social protection. This report makes the case for placing the promotion of clean energy alongside these other priorities and describes the economic, social and environmental benefits that such a move would bring, through a “subsidy swap.” The report sets out the international context of subsidy swaps; summarizes notable country experiences with swaps in India, Indonesia, Zambia and Morocco; and calls for policy-makers to include swaps as part of their fossil fuel subsidy reform implementation strategies.

Voluntary sustainability standard (VSS) compliant coffee production is increasing at a higher rate than the overall sector, with significant growth coming from least-developed countries.

The coffee sector’s projected growth is fuelled by increasing demand from producing countries and emerging economies traditionally not among major coffee importers, including Brazil, Indonesia and China, and the expansion of retail options, such as ready-to-drink coffee and pods or capsules. However, the growth of VSS-compliant coffee is concentrated mainly in traditional markets such as Europe and the United States and remains lower than supply. This supply–demand imbalance can limit the market growth potential of VSS-compliant coffee and needs to be addressed by value chain actors to benefit from the opportunities that stem from growing coffee demand from producing and emerging countries.

The Sustainable Commodities Marketplace Series from IISD presents sustainable production and consumption market information on agricultural commodities to foster transparency, knowledge and strategic decision making for sustainable development. Future reports will focus on banana, cocoa, cotton, palm oil, soybean, sugar and tea.