The G20, and how our governments are bankrolling the business of climate change

As the leaders of the G20 - the world’s most powerful economies - gather in Turkey this weekend, they’ll have Paris on their minds. The G20 is the last major summit before the crucial Paris climate talks - and leaders know that they’ll be back together in just two week’s time - to try to hash out a global deal to avoid dangerous climate change.

Meanwhile, the V20 - finance ministers from twenty of the world's most climate vulnerable countries - have come together ahead of Paris. From flood-prone Bangladesh to storm-ravaged Philippines, they are joining forces to highlight the current and future burdens that climate change will place on national economies. They want to see a deal which puts those most impacted by climate change first - this means one that includes increased public financial support for their growing adaptation needs.

And this is where the challenge lies.

While developed countries claim that they are on track to meet their commitment to mobilise $100bn climate finance by 2020 for developing countries, the money is not getting to the poorest and most vulnerable people - those that even in a two degrees world will face huge difficulties, enormous costs and will struggle to cope. This is because funding for adaptation is being neglected. Oxfam estimates that only $4bn to $5bn is actually flowing as much-needed grants aimed at helping communities become more resilient to the impacts of climate change.

Skewed priorities

While vulnerable communities are being short-changed, the irony is that polluters continue to receive financial support.

Despite having pledged to phase-out fossil fuel subsidies in 2009, G20 governments are still finding the space in their budgets to give a substantial amount of cash to the fossil fuel industry - either by subsidising companies directly, or by handing out tax breaks which mean missing out on government revenues. In 2013 and 2014, G20 governments gave an average of $78 billion in public funds to subsidise the production of fossil fuels - making it cheaper for companies to explore, drill, frack, dig and pollute. And this is just the beginning.

The figure rises to a massive $452 billion when other forms of government support are included - like cheap loans which help companies clinch export deals, as well as investment by state-owned fossil fuel companies.

These subsidies are not simply a waste of money. By bankrolling the business of climate change, they are effectively piling up the costs on vulnerable countries. Predictably it’s the poorest people who pay the biggest price as climate change makes it harder to grow enough food to eat.

No more excuses on the climate finance front

The continued doling out of fossil fuel subsidies blows a hole in developed country excuses about not being able to provide climate finance guarantees. There’s no need to keep taking from stretched aid budgets - the money’s there, it’s just being put in the wrong place and must urgently be reallocated.

How a few example countries compare:

Fossil fuel subsidies, country comparison

Emerging G20 economies too will need to join in the phasing-out of fossil fuel subsidies if we are to have any chance of staying below two degrees. While production subsidies - unlike consumption subsidies - are not primarily designed to lower people’s bills, their removal should be done in a sensitive way, to ensure that lower-income and vulnerable groups do not suffer any negative effects.  

What the G20 can do for Paris

It is time for the G20 to stand in solidarity with vulnerable nations, stop paying the polluters, shift the subsidies, and support a new commitment for scaled-up adaptation finance in the new Paris agreement.

This entry posted by Kiri Hanks, Oxfam Energy Policy Advisor, on 13 November 2015.

Photo: Nur Lina, 52, pulls paddy rice seedlings ready for transplanting in the rice fields which are now being used but which were damaged by the Indian Ocean tsunami in 2004. Lho-nga village, District Aceh Besar, Aceh Province, Sumatra, Indonesia. Credit: Jim Holmes/Oxfam, November 2014

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G20 fossil fuel subsidies compared to climate adaptation finance

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1-Public funds for fossil fuel subsidies vs public grant-based adaptation finance. Adaptation grants are figures that are self-reported by each government, and are for 2014, apart from Australia, whose latest publicly available figures are from 2013. All are for grants targeted at adaptation, and the UK’s total also includes the relevant share of cross-cutting projects.

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