In New York this weekend (25–27 September) over 100 heads of state and government attended the UN Sustainable Development Summit to adopt the "Sustainable Development Goals" (SDGs) – the development agenda for the world for the next fifteen years. The goals cover 17 areas including their "Means of Implementation", which is how these goals will be funded. On Tuesday 22 September the Global Subsidies Initiative (GSI) of the International Institute for Sustainable Development (IISD) held a webinar exploring the potential for funding the SDGs through domestic resources liberated from fossil fuel subsidy reform. Panelists and participants discussed a GSI report that analyzes this issue directly and an international communiqué that calls for action on fossil fuel subsidy reform.

Fossil fuel subsidies are large, estimated at around US$550 billion in 2013. This is four times the level of development assistance from members of the Organization for Economic Co-operation and Development (OECD) or four times the amount of money government spend on supporting renewable energy. Subsidies to fossil fuels are also three and a half times larger than the cost to finance basic social protection, universal health and education coverage for the poorest. Removing fossil fuel subsidies would reduce carbon emissions by between 6-13% by 2050 and is one of five actions on energy that we must take to stay within a 2° warming target. Recent research from the OECD, also launched in September, from the OECD finds that the 34 OECD countries and emerging economies (Brazil, China, India, Indonesia, Russia and South Africa) are spending between US$160-200 billion supporting fossil fuel consumption and production. The Secretary General of the OECD, Angel Gurría, put it succinctly: "Governments are spending almost twice as much money supporting fossil fuels as is needed to meet the climate-finance objectives set by the international community, which call for mobilizing 100 billion US dollars a year by 2020". 

It is clear that there is huge potential from the phase out of fossil fuel subsidies to fund the SDGs. Indeed, fossil fuel subsidy reform and the correct taxation of fossil fuels is one of only a handful of possible items within the goals that would actually provide serious resources to some governments, through their own domestic effort rather than through aid, to deliver on ambition. The IMF estimates that if governments were to both remove subsidies and start taxing fossil fuels correctly that this could raise equivalent to 2.6% of global GDP at the same time as reducing global CO2 emissions by 23%. 

Based on the above facts, the issue is maintained within the new development agenda as a Means of Implementation, within Goal 12: "Ensure sustainable consumption and production patterns". 

To explore the links in more detail the GSI hosted a webinar on 21 September in the lead up to the launch of the SDGs: "Funding the Sustainable Development Goals through Fossil Fuel Subsidy Reform". The webinar looked specifically at the issue of fossil fuel subsidies in relation to the SDGs: How the removal of government subsidies to fossil fuels can enable greater fiscal space for governments to be able help fund health, education and safety nets for the poorest, as well as the transition to sustainable energy systems. Speakers included Vangelis Vitalis, Ambassador and Permanent Representative to the World Trade Organisation (WTO) New Zealand and member of the Friends of Fossil Fuel Subsidy Reform; Fabby Tumiwa, Executive Director, Institute for Essential Services Reform, Indonesia; Laura Merrill, Senior Researcher GSI and author of the report "Financing the Sustainable Development Goals through Fossil Fuel Subsidy Reform" and was moderated by Peter Wooders, Group Director Energy, IISD. 

Panellists discussed the need for governments and organizations to support the international communiqué in the lead up to Cop21 in Paris and the many areas in which fossil fuel subsidies themselves were holding the various SDGs back from gender, to governance as well as on climate change goals. Further, they discussed the opportunities from reform for governments to shift from universal subsidies to fossil fuels towards targeted subsidies to people in need, through the development of cash transfer and safety net programmes as in the Philippines, Morocco and Indonesia. Questions from participants from across 34 countries included around risks of backsliding on reforms in the face of high oil prices and the practical ability for governments to ring-fence domestic resources towards sustainable energy. 

As it has been recognised in the post-2015 development agenda, fossil fuel subsidy reform is central in many countries to the process of allocating scarce resources towards the achievement of the most pressing developmental goals. GSI will continue to work with countries, international organizations and key global fora to promote this potentially transformative process.

Further Resources 

• A recording of the webinar is available here. 
• The full report that the webinar is based on is available here. 
• Friends of Fossil Fuel Subsidy Reform and link to support the Fossil Fuel Subsidy Reform Communiqué here. 

For more information contact lmerrill@iisd.org.