Despite committing to phasing out fossil fuel subsidies in 2009, G20 nations – including Australia – continue to double-down on coal, spending at least $US63.9 billion on coal annually, according to a new report published this month.
The Overseas Development Institute, or ODI, is an independent think tank based in England and Wales, and this month they have published a new report entitled G20 coal subsidies: Tracking government support to a fading industry which tracks and analyses each G20 country’s progress in phasing out subsidies to the production and consumption of coal.
The report finds that G20 governments are supporting coal to the tune of $US27.6 billion annually in domestic and international public financing, $US15.4 billion in fiscal support, and $US20.9 billion in state-owned enterprise (SOE) investments.
The authors of the report explain that these investments include “support through a wide range of instruments to prop up coal production, coal-fired power production, and other consumption of coal and coal-fired power, as well as support which is justified as a means of facilitating the transition away from coal.”
To make matters worse, in the face of recent global trends towards clean energy growth, ODI found that government financial support for the production of coal-fired power had actually increased in recent years, growing from support of just over $US17.2 billion per year as an average for 2013-2014, to nearly $US47.3 billion per year as an average for 2016-2017.
“It has now been 10 years since the G20 committed to phasing out subsidies to fossil fuels, yet astonishingly some governments are actually increasing the amount they give to coal power plants,” said lead author Ipek Gençsü, Research Fellow at ODI.
“Momentum is growing around the world for governments to take urgent action to tackle the climate crisis. Ending subsidies to coal would bring environmental, social and economic benefits to all and help set a level playing field for clean energy.”
The report comes only days before the G20 meet in Japan, who will act as this year’s host, but who remains one of the largest providers of public financing for overseas coal at US$5.2 billion annually.
Japan’s drive to support overseas coal undermines comments made by Japanese Prime Minister Shinzo Abe in September 2018, saying “Climate change can be life-threatening to all generations … We must take more robust actions and reduce the use of fossil fuels.”
“Other G20 governments may struggle to take Japan’s rhetoric on climate change seriously, as this year’s G20 host government continues to pour billions of dollars into propping up coal in Japan and around the world,” said Han Chen, manager of international energy policy at NRDC and co-author of the report.
“If Prime Minister Abe is serious about dealing with climate change, he should lead by example and end Japan’s government-backed finance for coal.”
The annual G20 meeting begins on Friday.
China and India remain two of the world’s largest supporters of coal, despite individual calls for and efforts to increase their share of renewable energy.
China sits as the world’s largest consumer of coal for power generation and industry but pledged in 2014 to reduce its level of coal consumption to 58% of total energy consumption or below by 2020. However, China continues to provide international public finance for coal mining and coal-fired power overseas to the tune of US$9.5 billion annually.
Similarly, India’s banking system – dominated by domestic public institutions – is providing US$10.6 billion annually in public financing for coal mining and coal-fired power domestically.
The support for coal doesn’t stop there, however, with several countries providing “substantial subsidies” to the consumption of coal-fired power. That being said, “there is very limited transparency” to these policies around the world, and ODI could not provide easily quantifiable figures.
One country ODI could focus on, however, is Indonesia, which provides over $US2.3 billion in fiscal support each year for coal consumption, “with the stated reason being to compensate electricity generators for the increase in coal prices and for having to sell electricity to domestic consumers under regulated prices.”
ODI also found subsidies relating to the provision of below-market prices for electricity consumers in China, Mexico, Russia, and South Africa.
“In reality, government support to coal is much larger than our report’s numbers show, because many G20 countries still lack transparency on the many ways they subsidise coal,” explained Ivetta Gerasimchuk, IISD Lead for Sustainable Energy Supplies and another co-author of the report.