Financial giants repeat calls for G20 to phase-out fossil fuel support

The financial sector is calling on G20 governments to sever ties with the fossil fuel sector, as 16 major companies with assets under management worth $2.8trn signed a joint statement for governments to phase-out subsidies by 2020.

Financial firms including Aegon, Aviva and Legal and General are among the 16 companies that have highlighted the risk that continued government support towards fossils fuels will have on the financial sector. The statement calls on G20 governments to set a clear deadline, by 2020 at the latest, for the phase-out at the G20 Summit in Germany in July later this year.

The timing of the statement, which was released on Wednesday (15 February), is strategic. G20 Foreign Ministers are meeting in Bonn, Germany today and tomorrow to discuss how nations can collaborate to address global challenges relating to sustainable development, sustaining peace and accelerating development in Africa.

In 2016, Aegon announced its decision to divest away from coal mining, and the firm’s global head of strategy and sustainability Marc van Weede claimed that support of the statement will help “raise awareness about the impacts of fossil fuel subsidies. It is our belief that these subsidies are delaying the transition to green energy.”

Echo chamber

The G20 has made numerous pledges since 2009 to phase out “inefficient fossil fuel subsidies” over the medium term, but financial firms such as Aegon have continuously penned statements to the governments calling for tangible action.

In August 2016, the firm was joined by Aviva and Amlin – the three companies collectively managing $1.2tn in assets – to call on the governments to act, using the Paris Agreement as a basis for their appeal.

Research published earlier this week, from the Global Subsidies Initiative and the Overseas Development fund, predicted that ending subsidies for global fossil fuel production would be equivalent to eliminating global emissions from the aviation sector.

Elsewhere, figures from the Overseas Development Institute and Oil Change International claim that G20 governments are spending $444bn annually to support the fossil fuel sector; although G7 nations – the UK, the US, Canada, France, Germany, Italy and Japan – have since agreed a deal to end the majority of fossil fuel subsidies by 2025.

Commenting on the new statement, the Overseas Development Institute’s climate and energy research programme head Shelagh Whitley said: “Global investors and insurers are sending a clear message to governments that burning public money through fossil fuel subsidies is not just bad for the planet, but bad economic policy too.”

The phase-out of fossil fuel subsidies could have huge ramifications in Europe. Research earlier this week from non-profit institute Climate Analytics found that the last European coal plant must be closed by 2030 in order for the continent to play its role in meeting the objectives of the Paris Agreement.

Matt Mace

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