G20 Coal Subsidies: Government Support to a Fading Industry
Last year, the Intergovernmental Panel on Climate Change made clear in its special report that limiting warming to 1.5 degrees Celsius would require a rapid phaseout of coal. Unfortunately, findings from our new report show that G20 governments have been increasing the support for coal, especially coal-fired power plants, in the past few years. The results of our analysis are surprising since G20 governments pledged in 2009 to phase out fossil fuel subsidies—so subsidies for coal, oil and gas.
Our report, G20 coal subsidies: Tracking government support to a fading industry, shows that G20 governments are currently providing at least $64 billion each year to prop up the production and consumption of coal. Despite a historic fall in total global investment in coal, the average annual amount G20 governments spent to help build and sustain coal-fired power plants increased from $17 billion to $47 billion between 2014 and 2017.
The report presents new research from the Overseas Development Institute (ODI), Oil Change International (OCI), the International Institute for Sustainable Development (IISD), and the Natural Resources Defense Council (NRDC).
With the G20 summit coming up in Japan on June 28 and 29th, eyes will be on Japan to see whether it can provide any leadership on key issues, with the Paris Agreement and the phaseout of coal being two important climate-related topics to watch. Unfortunately, Japan has been one of the real laggards in the coal phaseout, because it is planning to build so many new coal plants domestically while spending at least $5 billion per year to build coal plants abroad. And even though Prime Minister Shinzo Abe has publicly written about the need for global climate action, Japan’s newly released Long-Term Strategy includes plans to increase the use of coal in Japan and has been criticized as unambitious by domestic companies and organizations. In contrast, several G20 countries have taken important steps away from coal in recent years, including the UK and Canada who have together created the Powering Past Coal Alliance, and Germany where the coal commission established by the government has announced a phaseout date for all coal plants.
The total amount of government support identified, at least $64 billion per year, comes through three main sources:
- $28bn per year through governments’ public finance institutions such as bilateral development banks and export credit agencies investing in coal projects, with the majority of this being spent abroad
- $15bn per year of fiscal support through budget allocations and tax exemptions
- $21bn per year invested through majority state-owned coal mining and utility companies
The report calls on the G20 countries to end support for coal and make good on their promises to end subsidies to all fossil fuels. Governments should:
- Urgently agree to a complete phase-out of support to coal mining and coal-fired power
- Complete peer reviews of their support to coal and other fossil fuels by 2020
- Establish country-level plans for ending support to coal which ensure there is a ‘just transition’ for workers and communities, particularly the most vulnerable, and that do not prolong the production and use of coal
The full report and the individual country briefs for G20 countries can be found here: odi.org/g20-coal-subsidies