Fossil fuels are still subsidised: G20 could push for the funds to be shifted to cleaner energy

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2 days ago

As the G20 presiding nation, South Africa has an opportunity to champion issues relevant to emerging economies, says the author.
Image: Independent Media
As the G20 presiding nation, South Africa has an opportunity to champion issues relevant to emerging economies. One of these issues is government subsidisation of privately owned fossil fuel corporations.
Fossil fuel subsidies are paid when a government covers some of the costs involved in producing fossil fuel energy. This can be done by increasing the revenue received by oil, gas or coal companies, or lowering the price paid by consumers for fossil fuel based energy.
Fossil fuel subsidies may include tax breaks, low interest loans, and underpriced energy, all of which reduce costs for companies or consumers and encourage more fossil fuel use.
Some subsidies are explicit: when fuel is sold below its real supply cost or when producers receive financial support from the government. Others are implicit: when fuel prices don't reflect the full environmental and health costs. For example, what the consumer pays for petrol excludes the cost of impacts like pollution.
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South Africa has set four key priorities for its 2025 G20 presidency. These are: strengthening disaster resilience; keeping debt levels down; mobilising the finance needed to move to renewable energy; and setting up green industries.
South Africa, as G20 president, should push for fossil fuel subsidies to be shifted into funding cleaner energy and climate adaptation.
This should be paired with strong support for clean energy investments and measures to retrain fossil fuel workers for sustainable, green economy jobs.
The cost of fossil fuel subsidies
The G20 is made up of 19 of the world's largest economies, spanning both developed and developing nations, along with two regional blocs: the European Union and the African Union. Collectively, its members represent 85% of global gross domestic product, over 75% of international trade, and approximately two-thirds of the world's population.
Developed countries are the largest historical contributors to greenhouse gas emissions. They've built their industries using fossil fuels.
Globally, fossil fuel subsidies amount to $11 million every minute. Despite a commitment in 2009 to scale back subsidies, the G20 nations spent over $1 trillion on them in 2023.
What South Africa can do as G20 president
Ending fossil fuel subsidies is not just about removing financial support. It is about using those resources better by redirecting the money to solar, wind and other renewable technologies.
As G20 president, South Africa should set up a working group or ministerial dialogue focused on subsidy reform. Forging coalitions with other emerging economies and civil society actors will build support.
South Africa can help reshape the global conversation to centre on economic justice and energy security.
As president it should encourage G20 members to adopt clear, actionable renewable energy transition plans that safeguard workers (like coal and oil workers) and communities who will be left worse off when fossil fuel subsidies end and their industries close down. This will ensure a just and inclusive move towards a cleaner energy future.
Llewellyn Leonard
Image: Social Media
Llewellyn Leonard is a professor of Environmental Science, University of South Africa.This article was originally published on The Conversation.
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