Bridges Weekly Trade News Digest • Volume 13 • Number 39 • 11th November 2009

G20 Finance Ministers Fall Short on Climate Finance, Subsidies: NGOs

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Volume 13 Number 39 PDF • 0.23 MB

Finance ministers from the Group of 20 rich and emerging economies achieved broad consensus on economic stimulus plans at their meeting on 6-7 November in St Andrews, Scotland. But, to the dismay of many in civil society, the ministers fell short of conclusive agreements on how they plan to cut fossil fuel subsidies and finance the global fight against climate change.

Common concerns over unemployment and uneven growth rates led the ministers to vow “to maintain support for the recovery” until the health of global economic and financial systems can be assured.

“This is a new approach to economic co-operation and a major step. We have agreed to take dramatic action to ensure we have growth in the future,” said Alistair Darling, British Chancellor of the Exchequer, who hosted the meeting.

The final communiqué released after the meeting makes no mention of the WTO’s Doha Round of trade talks, which have struggled to produce much forward movement this year.

Focus on fossil fuel subsidies, climate finance

After a strong push for action from the G20 leaders in September, expectations were high for the ministers to strike agreements on climate financing and the phasing out of subsidies for fossil fuels. But the ministers took no concrete action on either front.

Leading up to the finance ministers meeting, a group of NGOs calling itself The Green Economy Coalition urged the ministers in a letter to remove fossil-fuel subsidies as soon as possible. These subsidies “contribute directly to climate change, cost hundreds of billions of dollars each year, and create artificial barriers to sustainable development,” the group said.

The ministers discussed the proposed subsidy cuts, but put off making any major decisions on the matter.

“We will prepare … implementation strategies and timeframes, based on our national circumstances, for rationalising and phasing out inefficient fossil fuel subsidies that encourage wasteful consumption, and for providing targeted assistance programmes,” the ministers said in their final communiqué. The statement also calls on the International Energy Agency, OPEC, the OECD and the World Bank to produce a joint report on the subsidies, which the ministers pledged to consider at their next meeting.

The meeting had a similar outcome on climate change finance. The ministers said in their communiqué that they are working toward an “ambitious international agreement” on the financial aspects of climate change, but little was decided at the St Andrews meeting. Despite previous assurances, the ministers did not put any new money on the table to help developing countries deal with climate change.

“We discussed a range of options and, recognising that finance will play an important role in the delivery of the outcome at Copenhagen, we commit to take forward further work on climate change finance, to define financing options and institutional arrangements,” the leaders said in their communiqué.

Green group WWF was not impressed with the outcome. Richard Dixon, director of WWF Scotland called the ministers meeting “a mostly irrelevant sideshow” on the road to major climate talks in Copenhagen next month. “This is a group that can throw money at collapsing banks but cannot find adequate figures for the far worse challenge to the global economy of a collapsing climate system,” he added.

The G20 includes the European Union and 19 countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, and the United States. Taken together, the G20 economies account for roughly 90 percent of world output.

More information

The letter from The Green Economy Coalition is available here: http://ictsd.org/downloads/2009/11/letter-from-the-green-economy-coalition-to-g20-finance-ministers.pdf.

ICTSD reporting; “G20 finance ministers agree to maintain fiscal support,” TELEGRAPH, 8 November 2009; “G-20 finance officials commit to economic stimulus measures until recovery takes hold; UK retreats from “Tobin tax” proposal,” FINFACTS, 9 November 2009.