G-20 government leaders today concluded the Pittsburgh Summit with a commitment to phase out fossil fuel subsidies over the medium term while providing targeted support for the poorest households. The leaders said that this unprecedented move is expected to encourage energy conservation, improve energy security, and kick-start their commitment to reduce greenhouse gas emissions.
In his closing address to the G-20 leaders, host President Barack Obama said, "We agreed to phase out subsidies for fossil fuels so that we can transition to a 21st century energy economy - an historic effort that would ultimately phase out nearly $300 billion in global subsidies."
The members of the G-20 are the leaders of 19 countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom and the United States, as well as the European Union, represented by the rotating council presidency and the European Central Bank.
In implementing the phase-out of fossil fuel subsidies, the G-20 leaders recognized that their economies account for over 80 percent of the world's energy use.
Eliminating fossil fuel subsidies worldwide would reduce global greenhouse gas emissions by 10 percent or more by 2050, according to estimates by the International Energy Agency and the Organization for Economic Cooperation and Development.
Removing fossil fuel subsidies helps eliminate market distortions, strengthening incentives for investments in energy efficient technologies and non-fossil energy supply.
Cutting energy subsidies is also expected to lead to reduced consumption, lower import demand and increased availability of energy for export – all helping to reduce the likelihood of a future supply crunch.
In 2008, demand grew in countries subsidizing oil by nearly one million barrels per day, despite high prices.
The G-20 leaders say eliminating the subsidies will free resources for targeted social assistance that could significantly improve the quality of life for low-income households.
Phasing out the subsidies that contribute to unsustainable use of fossil fuels in tandem with international efforts to expand access to modern energy services will make a substantial contribution to the reduction of air pollution and help save lives, they said.
Environmentalists praised the move, although some said it does not go far enough towards averting climate change catastrophe.
Friends of the Earth President Erich Pica said, "We commend the G20 for its agreement to end government subsidies for fossil fuels, but feel that industrialized country leaders missed an opportunity to make real commitments to fund international climate finance. While this is an important step forward in weaning the globe off of dirty fossil fuels, the lack of financial commitments jeopardizes an international agreement on global warming."
Natural Resources Defense Council President Frances Bernecke was more supportive, saying, "This commitment represents a strong down payment for a clean energy future."