Renewed call for the removal of fossil-fuel subsidies

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GENEVA, April 17, 2015—A coalition of governments are calling for the phase-out of subsidies to fossil fuels in the lead-up to a major climate conference in Paris.

A group of eight countries known as the Friends of Fossil Fuel Subsidy Reform released a Communiqué encouraging governments to prioritize the reform of fossil-fuel subsidies ahead of the United Nations Climate Change Conference in Paris this year.

The Friends, with the support of the International Institute for Sustainable Development, are encouraging other governments to endorse the statement. France today became the first country outside the Friends group to do so.

The International Monetary Fund estimates that energy subsidies in Canada top an incredible $34 billion each year in direct support to producers and uncollected tax on externalized costs.

“By endorsing this Communiqué, we highlight the importance of fossil-fuel subsidy reform as a key climate change mitigation policy with clear economic, social and environmental benefits,” said Denmark’s Minister of Trade and Development Cooperation, Mogens Jensen.

“I am proud that Denmark has been leading in supporting fossil-fuel subsidy reform through the past years and would hope for others to join our efforts going forward.”

Costa Rica, Denmark, Ethiopia, Finland, New Zealand, Norway, Sweden and Switzerland, which make up the Friends group, point to the fact that fossil-fuel subsidies are harmful to the environment and economic development.

Often fossil-fuel subsidies disproportionately benefit wealthier households, which consume more energy.

“By launching this Communiqué we invite countries and other actors to come forward and publicly express their support to phasing out harmful fossil-fuel subsidies.

The timing is right with Paris on the horizon and a growing number of countries considering or undertaking reform,” said New Zealand’s Minister for Trade and Climate Change Issues, Tim Groser.

“Fossil-fuel subsidy reform has both economic and climate benefits. Reform will free up financing for sustainable development. Norway will contribute 100 million Norwegian kroner (app. US$ 12.5 million) to fossil-fuel subsidy reform, and we strongly encourage other countries to increase their efforts and support the call for reform,” said Norway’s Minister of Foreign Affairs, Børge Brende.

Recent years have seen significant progress to advance fossil-fuel subsidy reform; however, these subsidies are still a huge burden on public finances in many countries. In 2013, governments around the world spent more than US$ 548 billion on fossil-fuel subsidies.

By keeping prices to consumers artificially low, fossil-fuel subsidies encourage wasteful consumption, disadvantage renewable energy and drain scarce public resources that could be better spent on other sustainable development goals.

The elimination of fossil-fuel subsidies would make a significant contribution to the goal of keeping average temperatures from rising more than two degrees Celsius above pre-industrial levels.

“The evidence is actually quite clear. Estimations show that eliminating fossil-fuel subsidies would reduce global greenhouse gas emissions by between 6 and 13 per cent by 2050 and can be done without harming the poor,” said Swiss Federal Councillor Johann N. Schneider-Ammann.

The Communiqué  is available here:

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