G20 Leaders on Friday re-affirmed their commitment to the groundbreaking decision taken at the Pittsburgh G20 Summit in 2009 to phase out fossil fuel subsidies in the medium term.
Support for the initiative has grown worldwide over the last year, but G20 leaders have been criticized for taking no concrete steps to follow up on their promise.
A White House tried to put a positive spin on the issue, saying that the group recognized "substantial progress" that has been made in the last 14 months and agreed to monitor their progress over the next year.
Leaders also agreed to take concrete steps to make the world’s physical
oil markets more transparent and to continue to improve the regulation
of financial oil derivative markets. These actions–which were not detailed–are expected to
reduce the volatility of oil prices, thereby benefiting both energy
producers and consumers, according to the release.
Before the G20 summit, nonprofit groups Oil Change International and Earth Track jointly released a report stating that no new actions have been taken by G20 nations as a result of their commitment in Pittsburgh.
However, the G20 countries say they have put forward national strategies and timeframes and are now working on identifying the resources needed to implement national strategies.
Mexico was offered as an example. Its government has begun phasing out motor fuel subsidies while conducting a household-level census of fuel consumption that is meant to compensate low-income households. In addition, India decontrolled gasoline prices and raised the prices for diesel, kerosene, and liquid petroleum gases (LPG).
Despite the limited examples, the G20’s committment to "re-assess progress next year" sounds a lot like "we don’t plan to do much in the year ahead" to the cynical observer.
The U.S. said it will do its part, with President Obama stating that he will work with
Congress to phase out over $3 billion a year in preferential tax
incentives for the coal, oil, and gas industries. But as we all know, Obama has had a tough time finding any Congressional Republicans willing to work with him, and they aren’t likely to turn on their corporate energy sponsors.
G20 leaders also said they took steps to reduce oil price volatility in the
future. They asked international organizations to improve reporting on
global oil production, consumption, and inventories as a means of
increasing market transparency. They also called on regulators to
implement International Organization of Securities Commissions (IOSCO)
recommendations on improving commodity financial market data, market
transparency, and regulatory cooperation and take steps needed to combat
market manipulation.
$300 billion in subsidies
The International Energy Agency (IEA), World Bank, and Organization for Economic Cooperation and Development (OECD) submitted to G20 Leaders in Seoul a report that found the value of fossil fuel consumption subsidies remained over $300 billion in 2009, a heavy burden on government finances that displaces important public investments, worsens balance of payments, leads to underinvestment in infrastructure, and contributes to energy shortages.
The G20 leaders asked the international organizations to update their report and assess progress being made in advance of the G20 Summit next year as a means of "holding themselves accountable" to their commitment to phase out fossil fuel subsidies.
Read additional coverage at The Economist blog, at the link below.
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