G20 countries gave record $1.4 trillion to support fossil fuels in 2022: report

Source: The post is based on the article “G20 countries gave record $1.4 trillion to support fossil fuels in 2022: report”  published in Indian Express on 23rd August 2023.

What is the News?

International Institute for Sustainable Development (IISD) and partners has released a study titled “Fanning the Flames: G20 Provides Record Financial Support for Fossil Fuels”.

What are the key findings of the study?

G20 members provided a record $1.4 trillion (approximately Rs 116 lakh crore) in public money to support fossil fuels in 2022.

This support includes fossil fuel subsidies ($1 trillion), investments by state-owned enterprises ($322 billion) and lending from public financial institutions ($50 billion).

While much of this was support for consumers, around one third (USD 440 billion) was driving investment in new fossil fuel production.

What are the concerns raised by the study?

G20 members’ financial support for fossil fuels in 2022 is more than double the pre-Covid-19 and pre-energy crisis levels of 2019.

– This support also 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 (GHG) emissions while undermining the cost-competitiveness of clean energy.

What are the recommendations given by the study?

– Stop providing public funds to fossil fuels, except for ensuring energy access for the poorest.

– Wealthier G20 nations, with higher historical emissions, should take the lead.

– Encourage consumers and investors to move away from fossil fuels by setting minimum carbon taxes (between $25 and $75 per tonne of CO2) based on a country’s income.

– Use the revenues from cutting subsidies and carbon pricing to help low-income households and promote clean energy.

– Support developing countries through flows of finance, knowledge, capacity and technology to ensure smooth transition towards clean energy.