Investments in fossil fuels by the governments of 20 of the world’s richest and fastest growing economies hit new highs last year, even before the energy crisis began and despite the worsening effects of the climate crisis, a new report has revealed.
The Group of 20 or G20, which includes 19 countries and the European Union, has invested $64 billion to subsidize fossil fuel production in 2021, according to the eighth annual report Climate transparency report.
The report, released on Thursday, is compiled by an international partnership of organizations to take stock of G20 climate action ahead of the upcoming UN Cop27 climate summit.
Broader G20 government subsidies to fossil fuels had fallen to $147 billion in 2020, but rose again by 29% to $190 billion in 2021, according to data from the Organization for Development Cooperation. Economics (OECD).
The surge in subsidies is partly attributable to the rebound in economic activities after the first year of Covid shutdown and despite big promises made by major economies to reduce the use of fossil fuels which generate emissions and, in turn, the global warming.
The report notes that subsidies have continued to rise until 2022, partly due to the Russian invasion of Ukraine which triggered a spike in energy prices, which also inflated the profits of energy companies. .
“Too much public energy funding in the G20 is still directed towards the fossil fuel industry. 63% of G20 public energy funding went to fossil fuels in 2019-2020,” said Ipek Gençsü, senior researcher at the Overseas Development Institute think tank and financial manager of the report.
Ms Gençsü adds that while the G20 promised to “phase out and rationalize” fossil fuels over time, “it is clear that the G20 did not deliver on its promises” and that large sums of money continue to be used to “distort the market in favor of fossil fuels”.
The countries with the highest total fossil fuel subsidies are China, Indonesia and the UK, which support production and consumption that will help raise global temperatures, the report said.
The impacts of rising emissions caused by the production of fossil fuels that countries support, however, have also been extreme.
India was the worst casualty of losses among the G20, with heatwaves leading to $159 billion in lost revenue, which accounted for 5.4% of gross domestic product (GDP) in service sectors, manufacturing, agriculture and construction in 2021.
The country, historically responsible for just 3% of global emissions but also now the third largest polluter, will see 142 million people, or about 10% of the population, exposed to summer heat waves when the world reaches a warming of 1, 5°C.
“Rising temperatures have led to revenue losses in services, manufacturing, agriculture and construction sectors, with India, Indonesia and Saudi Arabia being the most affected countries,” said Sebastian Wegner of the Berlin Governance Platform, one of the report’s lead authors.
“Respective revenue losses are estimated at 5.5%, 1.6% and 1% of GDP,” he said.
Current levels of warming are already close to 1.2°C. The report warns that as temperatures rise, the impacts of climate change will become increasingly severe.
While in Brazil and India 10% of the current population is likely to be affected by 1.5°C heat waves, this figure rises to more than 20% under the 3°C warming scenario.
The upcoming Cop27 summit, to be held in Sharm el-Sheikh in Egypt, will once again see countries negotiate ways to limit warming below the Paris agreement’s agreed level of 1.5C . But many experts have warned in the past that the pledges made so far are failing to limit warming to agreed levels.