Parul
In 2022, G20 members spent $1.4 trillion to support fossil fuels and they could raise an additional $1 trillion per year by establishing a carbon tax floor of $25-50/tCO2e. These funds could help solve some of the most pressing global issues, according to a new report released on Wednesday.
G20 members provided a record $1.4 trillion in public money to support fossil fuels in 2022, according to the study “Fanning the Flames: G20 Provides Record Financial Support for Fossil Fuels” by the International Institute for Sustainable Development (IISD) and partners.
That amount, which includes fossil fuel subsidies ($1 trillion), investments by state-owned enterprises ($322 billion), and lending from public financial institutions ($50 billion), is more than double the pre-COVID-19 and pre-energy crisis levels of 2019.
“These figures are a stark reminder of the massive amounts of public money G20 governments continue to pour into fossil fuels despite the increasingly devastating impacts of climate change,” said Tara Laan, Senior Associate at IISD and the lead author of the study.
“The G20 has the power and the responsibility to transform our fossil-based energy systems. It is crucial for the bloc to put fossil fuel subsidies on the Delhi Leaders’ Summit agenda and take meaningful actions to eliminate all public financial flows for coal, oil, and gas,” Laan said.
The researchers found that G20 members could raise an additional $1 trillion every year by setting minimum carbon taxation levels of $25–75/tCO2e, depending on country income. tCO2e stands for tonnes (t) of carbon dioxide (CO2) equivalent (e).
The study emphasises the active role that needs to be played by state-owned enterprises, which dominate the energy landscape in many G20 member countries, and public financial institutions, which engage in considerable lending to fossil energy projects.
Governments should, in particular, set a deadline for these state-owned institutions to create ambitious net-zero roadmaps that will allow them to diversify their businesses and lending portfolios and avoid the risks inherent in continued investments in fossil fuels, such as stranded assets.
“With fossil fuel companies gaining record profits amid the energy crisis last year, there is little incentive for them to change their business models in line with what’s needed to limit global warming. But governments have the power to push them in the right direction,” Laan added.
