Climate change is real, but global commitments to reduce fossil fuel subsidies are just smoke and mirrors
While the world is increasingly awakening to the realities of climate change – marked by extreme heatwaves, rampant wildfires, and catastrophic floods from the Americas to Europe to Asia – there remains a troubling retreat from emission reduction commitments. These natural disasters serve as grim markers of the toll human activities are taking on the planet, primarily due to escalating fossil fuel consumption.
Though there’s no lack of effort to curtail fossil fuel use, the needle is hardly moving. Global temperatures persist in their upward climb, manifesting in ever more severe weather events. As Christopher Beaton of the International Institute for Sustainable Development lamented to Bloomberg News, “We are overflowing with government commitments to phase out support for fossil fuels, but there is a serious drought in implementation.”
While governments set ambitious targets to tackle the climate change crisis, the actual implementation is fraught with political difficulties. Often, there’s a steep political cost associated with meaningful climate action, causing governments to hesitate in adopting truly effective policies.
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A striking example is the continued global spending on fossil fuel subsidies, which, according to the International Monetary Fund (IMF), exceeded $7 trillion in 2022. This translates to governments around the world allocating about $13 million per minute to artificially suppress the prices of oil, gas, and coal. Just two years prior, in 2020, that figure was $11 million per minute. The IMF had warned in 2020 that without intervention, this spending could escalate to $6.4 trillion by 2025. That projection was surpassed three years early.
Initially pledging to eliminate “inefficient” fossil fuel subsidies in 2009, the G20 nations – responsible for 80 percent of global carbon emissions – actually increased their combined subsidy contributions to a record $1.4 trillion in 2022. Prominent among the subsidizers are the United States, China, Russia, the European Union, and India. “We are overflowing with government commitments to phase out support for fossil fuels, but there is a serious drought in implementation,” Christopher Beaton, who researches sustainable energy consumption for the International Institute for Sustainable Development, told Bloomberg News. “During the last two years, at the international level, we have gone backwards.”
This trend is not just limited to governments: major oil corporations are also backpedalling on their climate commitments. Jason Bordoff, the founding director of the Center on Global Energy Policy at Columbia University, noted that “some of the more prominent energy companies” have retreated from their commitments to transition to clean energy, only to find their share prices rising as a result.
In Canada, Suncor, a leading oil sands company that once invested heavily in renewable energy, has shifted its focus back to fossil fuels. An editorial from the Globe and Mail last week indicated that the CEO of Suncor, Rich Kruger, is now dismantling the company’s sustainability initiatives, claiming that Suncor had placed a “disproportionate emphasis on the longer-term energy transition.”
According to the Globe and Mail in its editorial comments last Friday: “(Suncor’s commitment to renewable energy ) is all in the past. Suncor sold its solar and wind assets last year.”
Last May, Exxon said its promise of net-zero greenhouse gas emissions by 2050 was “highly unlikely” because societies would not “accept the degradation in the global standard of living required” to reach the goal.
The fallout from these failed commitments is not just environmental. In countries like Pakistan, which is bound by IMF agreements to sell fuel at market prices, the burden on common people is becoming unbearable. The nation’s reliance on diesel for electricity generation, combined with the absence of subsidies, has led to soaring electric bills. This has resulted in widespread public discontent, sparking political unrest and destabilizing the region further.
The chasm between what is promised and what is executed in the fight against climate change is widening alarmingly. With each unmet commitment and each dollar spent on fossil fuel subsidies, the world risks squandering the rapidly shrinking window for mitigating the worst impacts of climate change.
It’s high time for words to give way to meaningful action.
Toronto-based Rashid Husain Syed is a highly-regarded analyst specializing in energy and politics, with a particular emphasis on the Middle East. Besides his contributions to both local and international newspapers, Rashid frequently lends his expertise as a speaker at global conferences. His insights on global energy matters have been sought after by organizations such as the Department of Energy in Washington and the International Energy Agency in Paris.
For interview requests, click here.
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