Two thirds of fossil fuel reserves must be left untouched if world is to limit global temperature rise to 2°C, ODI says
LONDON (Thomson Reuters Foundation) - G20 countries are spending $88 billion a year on fossil fuel exploration despite evidence that dangerous climate change is inevitable unless the majority of oil, gas and coal reserves are left untouched, a report said on Tuesday.
The UK-based Overseas Development Institute (ODI) said at least two thirds of existing fossil fuel reserves must be left in the ground if countries are to meet their target of limiting global temperature rise to 2 degrees Celsius.
Besides the risk of catastrophic climate effects, subsidies from the world's leading economies are diverting investment from renewable alternatives, such as solar, wind and hydro-power, the report found.
The report comes ahead of a G20 annual summit in Australia this week. Governments will meet in Paris in December 2015 with the aim of agreeing a new global deal to tackle climate change, due to take effect from 2020.
Shelagh Whitley, co-author of the report, said the subsidies represented the "ultimate hypocrisy" of the G20 governments.
"Five years ago, G20 leaders pledged to address climate change, use cleaner forms of energy and phase out inefficient fossil fuel subsidies, yet many are turning their back on this promise," Whitley told the Thomson Reuters Foundation.
According to the report, global subsidies for the production and use of fossil fuels amounted to an estimated $775 billion in 2012. Around $101 billion was invested in renewable energy in 2013.
The United States provided some $5.1 billion in national subsidies for fossil fuel exploration in 2013, almost double the amount spent in 2009.
On average, Australia provides $3.5 billion a year for the development of fossil fuel resources, Russia invests $2.4 billion annually, and Britain offers tax breaks and financial assistance worth $1.2 billion a year.
The world's top 20 private oil and gas companies invested $37 billion in exploration in 2013, less than half of the annual average spent by G20 governments, which suggests their exploration is highly dependent on public finance, ODI said.
"We tend to think of businesses in the fossil fuel sector as operating in a free market economy, but they are not actually profitable without government support," Whitley said.
The report found that every US dollar in renewable energy subsidies attracts $2.5 in investment, whilst a dollar in fossil fuels subsidies only draws $1.3 of investment.
Among its recommendations, the report called for explorations subsidies to be phased out, the elimination of bilateral and multilateral finance for fossil fuel exploration and greater transparency in budget reporting.
(Reporting By Kieran Guilbert; Editing by Ros Russell)
Our Standards: The Thomson Reuters Trust Principles.
