Investors and insurers boasting more than $742bn in assets under management have urged the G20 to end fossil fuel subsidies by 2020, warning of severe risks to the global financial sector unless a clear phase-out deadline is set.
A group of nine major investor, including Aviva, Glenmont Partners and the Environment Agency Pension Fund, have signed a joint statement calling on G20 governments meeting in Argentina this week to set a strict timeline to end all forms of state support for fossil fuels no later than 2020.
The statement, which was released yesterday , warns continued government support for fossil fuels increases the risk of creating stranded assets within the energy sector and could also decrease the competitiveness of key industries, including in the green, low carbon economy. It describes subsidies and public financing for production and consumption of fossil fuels as a “key concern” for the finance sector, slamming such support as “notoriously inefficient from an economics standpoint”. “They [fossil fuel subsidies] create a significant burden on government budgets, perpetuate income inequality by benefiting the richest consumers while failing to meet the energy needs of those lacking energy access, and damage public health by increasing air pollution,” it states.
The letter therefore calls for “concrete and ambitious timelines” for reforming all forms of fossil fuel support, bolstered by peer reviews of how subsidies work, by 2020.
It says the phasing out of fossil fuel subsidies should be accompanied by fresh commitments to deliver a ‘just transition’ for workers in fossil fuel sectors, and calls on the International Energy Agency (IEA) to develop a Paris Agreement-aligned decarbonisation scenario.
Subsidy support should instead be directed towards “wider social and sustainable development needs”, states the letter. It has also been signed by CCLA Investment Management, Earth Capital, Joseph Rowntree Charitable trust.
Research, which was published by the International Institute for Sustainable Development (IISD), the Overseas Development Institute (ODI), Oil Change International (OCI), and Fundación Ambiente y Recursos Naturales (FARN) warns that the shift away from fossil fuels must accelerate significantly if the G20 is to meet Paris Agreement targets and the UN’s 17 Sustainable Development Goals (SDGs).