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Centro de Economía Internacional
Fossil fuels subsidies in the agenda of the G20
María Victoria Lottici
Researcher
Centre for International Economy
Argentine Ministry of Foreign Affairs and International Trade
GSI-UNEP Conference - Increasing the Momentum of
Fossil-Fuel Subsidy Reform: Developments and
Opportunities
Geneva, 14 October 2010
Ministerio de Relaciones Exteriores, Comercio Internacional y Culto - Argentina
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G20 Commitment to Rationalize and Phase Out
Inefficient Fossil Fuel Subsidies
Relevant passages of the Pittsburgh Leaders’ Statement (Sept
2009):
• Inefficient fossil fuel subsidies encourage wasteful
consumption, distort markets, impede investment in clean
energy sources and undermine efforts to deal with climate
change (paragraph 29).
• Rationalize and phase out over the medium term inefficient
fossil fuel subsidies that encourage wasteful consumption
(paragraph 29).
Ministerio de Relaciones Exteriores, Comercio Internacional y Culto - Argentina
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G20 Commitment to Rationalize and Phase Out
Inefficient Fossil Fuel Subsidies
Relevant passages of the Pittsburgh Leaders’ Statement (Sept
2009):
• As we do that, we recognize the importance of providing those
in need with essential energy services, including through the
use of targeted cash transfers and other appropriate
mechanisms (paragraph 29).
• This reform will not apply to our support for clean energy,
renewables, and technologies that dramatically reduce
greenhouse gas emissions (paragraph 29).
• Stimulate investment in clean energy, renewables, and energy
efficiency and provide financial and technical support for such
projects in developing countries (paragraph 31).
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G20 ad hoc experts group on energy
1. Definitions of what constitutes an inefficient subsidy:
a. a commonly agreed definition: a major challenge in the
G20 context
b. a country-owned process
2. Implementation strategies based on national circumstances
3. IEA, OPEC, OECD and World Bank joint report:
a. scope of energy subsidies
b. suggestions for the implementation
of the G20 initiative
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Toronto Summit
Report to Leaders on the G20 Commitment to Rationalize and
Phase Out Inefficient Fossil Fuel Subsidies (June 2010)
• 11 countries submitted strategies and timetables to rationalize and
phase out inefficient fossil fuel subsidies:
 Argentina, Canada, Germany, India, Indonesia, Italy, Korea,
Mexico, Russia, Turkey and the United States
• 8 countries reported no inefficient fossil fuel subsidies to reform in the
context of G20 mandate:
 Australia, France, Japan, Saudi Arabia, South Africa and the UK
 Brazil and China to take actions on existing measures that affect
fossil fuels consumption or production, although measures are not
inefficient subsidies
• EU submission on energy taxation and state aid as a complement to
submissions from individual EU countries
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Next steps
1. G20 Sherpas (July 2010 meeting) asked energy experts
group to:
- continue to review progress towards the Pittsburgh
commitment
- undertake work with two additional energy-related agenda
topics: energy price volatility and global marine environment
protection (GMEP)
2. Proposal for a Second Joint Report on Fossil Fuel Subsidies
from the International Organizations (IEA and World Bank)
• Case studies highlighting progress made
and challenges faced
• To be provided to Leaders in Seoul
next November
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Comments regarding the G20 process
from CEI perspective
1. G20 commitment could be assumed as greenhouse gas
emission reduction commitments. It might be incompatible
with the UNFCCC provisions: common but differentiated
responsibilities and respective capabilities
2. The greatest impact on greenhouse gas emission reductions
should be achieved by changing both explicit subsidies and
measures—e.g., financial transfers and tax deductions—and
implicit ones—e.g., very low tax rates
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Comments regarding the G20 process
from CEI perspective
3. Excluding subsidies to renewable energy means disregarding
a significant support given to biofuels and indirectly to fossil
fuels
4. Definition of subsidy is no minor issue: it has consecuences
on countries energy policies. Why not use WTO subsidy
definition?
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Thank you
María Victoria Lottici
Researcher
Centre for International Economy
Ministry of Foreign Affairs and International Trade
E-mail: vlo@mrecic.gov.ar
Web Site: www.cei.gov.ar