Investors with $742 billion in assets urge G20 governments to end fossil fuel subsidies
Investors and insurers with more than USD $742 billion in assets under management have urged the G20 to end fossil fuel subsidies by 2020, warning of the severe risks this continued government support brings to the financial sector.
The group of nine investors, including Aviva and Sarasin and Partners, have signed a joint statement calling for G20 governments, meeting in Argentina this week, to set a concrete timeline to end all forms of government support to fossil fuels by no later than 2020.
In the statement, investors warn continued government support for fossil fuels increases the risk of creating stranded assets within the energy sector and can also decrease the competitiveness of key industries, including low-carbon businesses.
New research published today by the International Institute for Sustainable Development (IISD), the Overseas Development Institute (ODI), Oil Change International (OCI), and Fundación Ambiente y Recursos Naturales (FARN) shows that some G20 governments have made progress in shifting support away from fossil fuels and increasing taxation of fossil fuels. However, the report, Stories from G20 Countries: Shifting public money out of fossil fuels, warns this shift must accelerate significantly if the G20 is to meet the Paris Agreement targets and the Sustainable Development Goals by 2030.
The report includes examples from around the world of where progress has been made and where countries could do more, including:
- Indonesia saved USD $15.6bn by cutting back on inefficient subsidies for gasoline and diesel in 2015
- India collected USD $12bn in revenue between 2010 and 2018 through taxing coal production
- Since 2011, Canada has either completely phased out or reformed seven policies that subsidised the production of oil, gas and coal
Steve Waygood, chief responsible investment officer at Aviva Investors, said: 'Governments beginning to take stock of their commitment to Paris are falling at the first hurdle if they refuse to factor in fossil fuel subsidies for producers – including tax concessions and placing the burden of decommissioning the sector’s infrastructure on taxpayers.
‘As corporates are being asked to disclose the potential impact of climate risk on their balance sheets, we as investors are also asking governments to disclose the impact that fossil fuel subsidies have at country balance sheet level, providing us with useful information so that we can support economies as they make this important change.'
Shelagh Whitley, head of the Overseas Development Institute’s Climate and Energy Programme, said: ‘The message is clear from global investors to G20 governments, fossil fuel subsidies not only lead to air pollution and climate impacts, they’re bad for business too. G20 Ministers must listen to investors and ensure that country leaders commit to a firm deadline to end fossil fuel subsidies at the G20 Leaders’ Summit in Buenos Aires this November.’
Ivetta Gerasimchuk, Lead for Sustainable Energy Supplies at IISD, said: ‘If there is a way to stop taxpayers’ money going into the pockets of oil, gas and coal companies and rich energy guzzlers, it is through G20 countries learning from each other’s experiences: the hard-won reforms and steps forward that some have made.’
Notes to editors
- The full statement and list of signatories will be published on Wednesday, November 28
- Investors and insurers Aviva, CCLA Investment Management, Earth Capital, Environment Agency Pension Fund, Glenmont Partners, Joseph Rowntree Charitable Trust, Sarasin & Partners, USS and WHEB Asset Management have USD $741,535.68 billion in assets under management.
- The G20 leaders’ summit will take place in Buenos Aires, Argentina, on Friday, November 30, and Saturday, December 1, 2018
About the International Institute for Sustainable Development
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