Leading insurers tell G20 to stop funding fossil fuels by 2020
Three of the world’s biggest insurers have called on G20 leaders to implement a timeframe for ending fossil fuel subsidies when they meet in China this week.
The G20 has already committed to phase out “inefficient fossil fuel subsidies that encourage wasteful consumption” over the “medium term”. In May, the G7 nations pledged to achieve this by 2025.
When the leaders of the 20 largest economies meet in Hangzhou on Thursday and Friday, they must commit to an end to assistance for fossil fuel companies within four years, said a joint statement from insurers Aviva, Aegon and Amlin.
The statement read: “Given the urgency of the climate change crisis, underscored by the Paris agreement reached in December of 2015, the next steps on this commitment are long overdue.”
The three insurers manage $1.2tn (£916.9tn) in assets. Aviva’s CEO, Mark Wilson, said: “Climate change in particular represents the mother of all risks – to business and to society as a whole. And that risk is magnified by the way in which fossil fuel subsidies distort the energy market. These subsidies are simply unsustainable.”
Estimates of fossil fuel subsidies vary widely depending on the definition of a subsidy. The OECD reports that its member states contribute $160-$200bn each year to the production of coal, oil and gas.
But the International Monetary Fund (IMF) said this doesn’t account for the damage to the environment and human health, for which governments carry the cost. The IMF estimates this to amount to a staggering $5.3tn a year, or $10m per minute.
“We’re calling on governments to kick away these carbon crutches, reveal the true impact to society of fossil fuels and take into account the price we will pay in the future for relying on them,” said Wilson.
Last year the US and China issued a joint statement saying that they would use China’s G20 presidency to produce a timeline for the phaseout.
Shelagh Whitley, a research fellow at the Overseas Development Institute (ODI), said the G20 pledge to end fossil fuel subsidies was “empty” if it lacked a concrete timeline. ODI’s own estimate puts fossil fuel subsidies at $444bn each year.
“These subsidies fuel dangerous climate change,” said Whitley. “If we are to have any chance of meeting the 2C target set at the Paris climate summit then governments need to start a programme of rapid decarbonisation. The finance sector recognises the importance of moving away from fossil fuels, governments need to realise they may be the only ones left not moving.”
The statement was also signed by the Institute and Faculty of Actuaries (IFoA) and Open Energi. It comes six days after 130 investors issued a similar pre-G20 representation. In the US, the Sierra Club has launched a campaign calling on the Obama administration to support the same target.