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UK Worst of G7 Countries for ‘Hiding’ Fossil Fuel Subsidies — Report

11 June, 2018
Chloe Farand, Desmog UK

J.W. McLean Platform.jpg

J.W. McLean oil platform | Photo credit: Steven Straiton/Flickr [CC BY 2.0]

The UK has been accused of trying to “fudge” how much money it spends on subsidising coal mining and fossil fuel use despite its pledge to phase out environmentally harmful subsidies by 2020. 

The country ranked first on its commitment to end fossil fuel subsidies but last on transparency in a new study led by the Overseas Development Institute (ODI) which ranks each G7 country on ending support for the production and use of oil, gas and coal ahead of a group meeting which starts in Canada on Friday. The UK does not provide national reports on its fiscal support for fossil fuel production and consumption and the government has repeatedly denied providing fossil fuel subsidies. However, the report states that the UK is providing subsidies in the form of tax breaks for oil and gas exploration in the North Sea and the decommissioning of oil. 

Researchers also argue that the UK is using public finance through the UK Export Finance, a government agency which underwrites loans to boost British companies’ exports, to support fossil fuel projects abroad - a finance stream they say the government should be counting as a subsidy. A government spokesman said the UK was meeting its G7 targets since it has “no inefficient fossil fuel subsidies” following an assessment by the International Energy Agency. He added: “We are leading the world in tackling climate change, delivering the biggest carbon reductions of any G7 nation over the last 25 years.”

Inconsistencies

The authors of the report have pointed out to the inconsistency between the UK government’s climate commitments and its failure to recognise it is still handing out generous support for fossil fuel use.  Matthew Crighton, of Friends of the Earth Scotland, told DeSmog UK the UK and Scottish goverments should be developing a joint approach for a transition away from fossil fuels rather than encouraging oil and gas exploration and production in the North Sea. He said: “By providing financial support for the enormously wealthy oil and gas industry whilst giving crumbs to renewables, the UK government is backing the wrong technologies and drastically slowing the much-needed just transition to clean energy. They should convert subsidies to fossil fuel extraction into incentives for the fossil fuel industry to move rapidly to develop the energy supplies of the future, not to get locked into systems which we know we will have to abandon.” 

The study found that the world’s seven major industrial democracies spent at least $100 billion (£70 billion) a year to prop up oil, gas and coal consumption at home and abroad in 2015 and 2016 despite their pledge to end fossil fuel subsidies by 2025. While France topped the overall ranking, the UK scored the fourth lowest score out of seven and the US was last. The data analysed does not cover the Trump administration.

Shelah Whitley, head of the climate and energy programme at the Overseas Development Institute (ODI) and lead author of the report, told DeSmog UK the research found that all G7 countries had increased their support for fossil fuel exploration since countries committed to limit global temperature rise “well below” two degrees under the Paris Agreement in 2015. Describing the finding as “shocking”, she added: “Increased support for fossil fuel exploration is one of the most egregious activities that countries can be doing and directly counters their pledges under the Paris Agreement. Yet, they are still doing it.”

Scientists have previously warned that more than 80 percent of global coal reserves, half of all gas reserves and more than a third of the world’s oil reserves had to stay in the ground to prevent dangerous global warming of more than two degrees. Co-author Ivetta Gerasimchuk, from the International Institute for Sustainable Development, said: “G7 governments committed to phase-out fossil fuel subsidies back in 2009, but since then have made very little progress. At the same time, less wealthy countries with similar commitments made under the G20, such as India and Indonesia, have reduced subsidies by billions of dollars. The richest countries must demonstrate leadership in ending handouts to fossil fuels.” 

Transparency

The UK has made a series of commitments to phasing out fossil fuel subsidies. As part of the G7 it pledged to end all fossil fuel subsidies by 2025. As part of the EU, the UK also agreed to cut all environmentally harmful subsidies by 2020 and end subsidies to hard coal mining by 2018. Despite these pledges, the UK is the only G7 country with Japan which has not yet undertaken a peer review into its fossil fuel subsidies. The report urged the UK to take part in the peer review arguing that “this should be a high priority for the country if it is to demonstrate transparency and accountability in meeting its international commitments”.

While the UK government says it is not subsidising fossil fuel production or consumption, Whitley, of ODI, said the UK government was using its own definition of what counted as a fossil fuel subsidy. She added that the evidence used by the ODI and others to track subsidies showed that the UK was handing out such subsidies and suggested this was a fact the government may be trying to “hide”. She said: “They are trying to fudge it. They’ve made their own definition of subsidies, they say they don’t have any but refuse to take part in a peer review, which is suspicious. If there isn’t any subsidies, they shouldn’t be afraid of taking part in the peer review.” Whitley added that G7 countries did not have a system in place to track progress made in phasing out fossil fuel subsidies and warned that unless the group of developed countries put a system in place to hold themselves accountable, they won’t be able to reach the 2025 target.

Polluting abroad

According to Whitley, an estimated one billion pounds of UK public finance was spent on fossil fuel projects abroad mostly through the UKEF, which helps British companies enter the supply chain of major overseas projects. While the UK government does not consider this to be a subsidy other global organisations do. Whitley said the World Trade Organisation (WTO) included public finance money spent abroad as a subsidy and that the OECD was developing a similar approach.

DeSmog UK has previously reported that the UKEF was spending millions of pounds of taxpayers’ money to underwrite loans and guarantees supporting fossil fuel projects abroad — locking some developing countries into decades of fossil fuel use. Some of the key countries which have received UK guarantees and public finance for oil and gas exploration and/or production include the United Arab Emirates (UAE), Brazil, China, India, Saudi Arabia, Jordan, Singapore, and Vietnam. At the end of last month, international trade secretary Liam Fox visited the UAE and Bahrain to support 68 projects worth more than £30 billion to investors. The nature of the projects were not revealed.

Brazil has also been the focus of Fox’ department. Internal documents obtained by freedom of information requests previously revealed Fox told executives at oil giant BP earlier this year about his recent trip to Brazil, adding “now is a great time to get into Brazil”. It was later revealed that trade minister Greg Hands lobbied Brazilian officials on behalf of BP and Shell over taxation and environmental regulation, two months after BP’s meeting with Fox. Eight countries also received public finance support for oil and gas-fired power projects, including Bangladesh, Ghana, India, Nigeria, Sierra Leone, Turkey, Ukraine and the UAE. According to the report, 14 percent of UKEF credit exposure was to the oil and gas sector last year.  

Supporting coal mining

The report ranked the UK fifth out of seven for supporting coal mining.  The finding comes despite the UK having launched the Powering Past Coal Alliance with Canada last year and pledged to end unabated coal by 2025.  Researchers found that although support for domestic coal mining was equivalent to zero in 2015 and 2016, support was still granted in the form of extraction allowance and abandonment costs. Whitley added that the UK rated poorly compared to other countries because the subsidies were calculated relatively to the country’s GDP.

In 2016, the UKEF also provided a guarantee for the underwriting of coal mining equipment in Russia. Whitley said remaining support for coal mining was “notable” and she urged the government to follow the lead of others countries which successfully ended that support. This comes as DeSmog UK reported on the stories of the people of Kuzbass in Siberia, where coal production has been described as “hell on earth” and some of it is reported to be exported to the UK.

 

[This article originally appeared on desmog.co.uk]

ArticleClimate Diplomacy
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Climate Change
Climate Diplomacy
Energy
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Adaptation & Resilience

All countries will need to adapt to some of the environmental, social and economic impacts of climate change that are already unavoidable. Food security, livelihoods, water resource availability and public health are some affected areas. People living in poverty are more vulnerable, having a lower capacity to adapt. Thus, it is essential to promote resilience building. The adaptation and resilience aspects need to be mainstreamed into planning by policy makers and the private sector as well as integrated into development strategies.

Biodiversity & Livelihoods

Nature protection is most sustainable if it essentially contributes to the long-term stability of human needs. Today many regions around the world are confronted with increasing destruction of the natural foundations of life. The consequences of wide-ranging resource destruction are no longer regionally limited, but rather represent a global threat. Those affected are mainly rural populations, who find the sources of their income and the foundations of their way of life swept away. The depletion and destruction of natural resources goes hand in hand with decreasing agricultural yields and increasing poverty, which in turn forces the affected populations to deplete the remaining resources.

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Capacity Building

On the one hand, conflicts are caused by structural factors, such as economic and social inequality or environmental destruction. On the other hand, conflicts are fuelled by a lack of democratic structures, deficient mechanisms of non-violent conflict settlement, inadequate rule of law, the destruction of social and cultural identity and the disregard of human rights. Against this backdrop, development policies have been dedicated to a broad concept of security, which comprises political, economic, ecological and social stability. As a consequence, development cooperation agencies and actors have developed a broad spectrum of approaches for conflict prevention and transformation as well as for sustainable use of natural resources.

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Civil Society

Civil society is the first victim of environmental pollution, under-development and conflicts. Economically disadvantaged and politically marginalized population groups are particularly affected by violent conflicts as well as increasing resource degradation. Simultaneously, civil society is a fundamental pillar for implementing sustainable development. It contributes in many ways to strengthening conflict prevention and plays a significant role in the peaceful and democratic development of states. It must be supported to strengthen civil rights, adherence to human rights in general and democratic participation.

Climate Change

Climate change resulting from the emission of greenhouse gases represents one of the vital challenges for international environmental policy. Flooding, droughts, shifting of climate zones and increasingly frequent and intense extreme weather events will have serious economic and social consequences for entire regions. The climate problem is also directly linked to the question of future energy generation.

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Climate Diplomacy

To address the challenges posed by climate change, a new profile of climate diplomacy is evolving. This utilises a full range of policies, including development cooperation, conflict prevention efforts, and humanitarian assistance, in addition to more traditional measures of climate change adaptation and mitigation. Moving from a risk analysis of climate-related threats to well-timed preventive action requires a greater commitment to integrating climate change concerns into development, foreign, and security policies. Examples include strengthening diplomatic networks, building new alliances with partners, and raising awareness – not only of potentially negative climate change impacts, but also of opportunities to embark on a sustainable transformation of our societies.

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Co-Benefits

Climate action entails an array of economic, social, political and environmental co-benefits. It provides an opportunity for economic growth and new jobs. Many investments can take into account climate considerations without becoming more costly. Further important co-benefits include: improved energy security, less local air and water pollution, health benefits as well as ecosystem and biodiversity protection.

Conflict Transformation

In order to overcome the structural causes of violent conflicts and thus bring about an improvement in the framework conditions for peaceful and fair development, it is essential to have long term and broadly planned peace development and peace advancement. Various governmental and non-governmental, national and international actors and groups are involved in these processes.

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Development

Climate change and development are inextricably linked. Climate change endangers the development agenda and has the potential to reverse development goals. Furthermore, successful mitigation of climate change heavily depends on development choices around the world. Therefore, development strategies need to be climate-compatible to provide long-term success, and there are viable policy options that support this compatibility. Many mitigation and adaptation activities can present development opportunities to developing countries and avoid the lock-in to environmentally damaging technologies.

Early Warning & Risk Analysis

The reasons for the development and escalation of conflicts and the incidence of risks are multifaceted and complex. Simultaneously, the assessment of the specific causes in the form of risk and conflict analyses can contribute to a better understanding of these processes and make it possible to provide warning of negative developments, or ideally help prevent them. In the context of natural resource use, risks and conflicts have gained increasing attention in the past years. The debate on possible future water wars is merely one example.

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Energy

The well-being of individuals, communities and nations depends on the availability of energy resources. The gap between energy supply and demand appears to be growing, making the world vulnerable to serious economic shocks. At the same time, the burning of fossil fuels causing climate change is one of the vital challenges of international environmental policy. So far, only rudimentary approaches exist for shaping climate and energy security in a sustainable way. The components of a strategy that can contribute to reducing vulnerabilities related to climate change and energy policy include a greater role for renewable energies, the improvement of energy efficiency and a stronger decentralisation of energy supply.

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Environment & Migration

The economic, social and environmental consequences of climate change aggravate the breakdown of eco-system-dependent livelihoods and are likely to become dominant drivers of long-term migration. Natural disasters already cause massive shorter-term displacement and the number of temporarily displaced people is likely to further increase with climate change. For vulnerable populations in vulnerable regions, such as the Sahel zone or the Ganges delta, migration often becomes the sole survival strategy. In order to address climate-related displacement and migration successfully, knowledge of effective adaptation and an improved understanding of how environmental change affects human mobility is essential. 

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Finance

Climate finance, from all sources, plays a key role in supporting and enabling adaptation and mitigation action as well as climate and energy innovation. The Paris Agreement ensured that the Green Climate Fund and the Global Environment Facility are at the core of climate finance architecture as entities entrusted with the operation of the Financial Mechanism of the UNFCCC. Increasing climate finance from all relevant public and private sources is crucial. Furthermore, much needs to be done to redirect finance flows to sustainable paths, e.g. reducing fossil fuel subsidies, introducing maritime and air transportation taxes. The conditions for green investment in developing countries should also be improved.

Forests

Forests are disappearing at an alarming rate. Competition for forest resources triggers, exacerbates, or finances numerous crises and conflicts in tropical developing countries. Illegal logging and timber trade foster instability and sometimes violent conflict by strengthening illegal and armed groups, increasing corruption and exacerbating use and claim conflicts among local communities, the state and the business sector. Forests are a vital resource to poor people but they can also become areas of conflict. Sustainable management of forest resources is therefore key to preventing violent conflict over and within forests.

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Gender

Gender plays an important role as a category of conflict for many reasons. The interlinkages between gender, environment and conflicts are complex and much research is still needed. Existing insights suggest that conflicts may worsen gender inequalities that existed before the outbreak of violence. The unequal distribution of land property rights in many parts of the world serves as an example. Moreover, women (and children) are among those most affected by both violent conflict and natural disasters. At the same time, women carry much of the burden of trying to implement rehabilitation measures after crisis events.

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Land & Food

Increasing water scarcity, desertification and crop failures due to extreme weather events are becoming more and more of a threat to global food production. While the world’s population continues to grow rapidly, food production is unable to keep pace. Due to the global food crisis in 2008, the number of hungry people reached the symbolic one billion threshold for the first time – corresponding to about 16 percent of world population. Food insecurity may be a consequence or cause of conflicts. Violent conflicts often lead to the destruction of agricultural infrastructure and means of production, as well as to the displacement of local communities.

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Minerals & Mining

In the past, the discovery and tapping of valuable or strategic resources like valuable minerals, oil and natural gas, particularly in developing and emerging countries, has often led to large scale environmental contamination and negative development. The "resource curse" of some countries shows that the wealth from resource yields is frequently unfairly distributed; instead of serving development it advanced the formation of corrupt elites and in some cases even led to conflicts and civil wars. Measures in various sectors and at all levels are important in order to use the potential of these natural resources in a manner that is sustainable and prevents conflicts.

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Private Sector

The spread of violent conflict not only affects people but also companies located in such regions. Destruction of investments and infrastructure, collapse of markets and trade partnerships, flight and expulsion of employees are phenomena of conflicts and environment-induced crises that directly affect companies in unstable regions. Almost all branches of the economy thus have a clear interest in a stable and peaceful environment for their activities. Conversely, the business sector plays an important role in the interaction of economic growth, social development and a healthy environment, all of which can advance peace and sustainable development. 

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Security

Environmental issues have a significant security dimension. Access to, and overuse of, natural resources often play a key role in civil wars or other forms of internal domestic conflict. This is compounded by climate change and environmental degradation. Climate change is now widely recognised as a non-traditional, risk-multiplying threat that will have increasing security impacts. Key risks with possible implications for human and national security include water scarcity, food crises, natural disasters, and displacement. More preventive diplomacy and advocacy is needed to address the strategic implications of climate and environmental change.

Sustainable Transformation

Sustainable Transformation allows societies to profit from a growing, environmentally sustainable and socially inclusive economy – especially in emerging and developing countries. This requires a higher up-front investment, but the benefits of a sustainable transformation in the medium and long term are significant. For instance, energy cost savings and reducing the impact of price volatility offer major incentives for deploying renewable energies and promoting energy efficiency. Such benefits exist in all key sectors of the economy.

Technology & Innovation

Innovations and technologies are already readily available and affordable but their global diffusion and uptake remains a challenge. Innovation and technology are crucial to achieving ambitious climate change mitigation and adaptation targets. However, research and development often do not receive appropriate public support. Developing countries can leapfrog high-carbon industrialisation phases by adopting, deploying and improving existing innovations and technologies. For this, it is essential to minimise financial, administrative and political barriers.

Water

The availability of freshwater resources in sufficient quantity and quality is essential for the preservation of human health and sound ecosystems. The use of water resources is also vital, however, for economic development: whether for agriculture, industrial production or for electricity generation. The world's freshwater resources are distributed very unevenly in terms of geography and seasons. In addition, water shortage is becoming more prevalent in several regions due to population growth, economic development, urbanisation and increasing environmental pollution. Thus, water resources can hold potential for conflicts between parties who have different interests and needs.

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Regions

Asia

The environment in Asia is already under tremendous pressure as a result of the unsustainable use of land, forests, water and even air in many regions. Climate change will only exacerbate these challenges. Rising sea levels will likely endanger densely populated areas, changes in the monsoon patterns can strongly impact agriculture, melting glaciers will increase long-term water scarcity, and extreme weather events such as heavy rainfall and cyclones can pose further hazards.

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Central America & Caribbean

Natural disasters and water scarcity are key challenges for most of Central America and the Caribbean. These challenges will become even more pronounced as the climate changes. Weak resource and disaster risk management and land disputes pose additional security challenges for large parts of the region. Several countries of Central America and the Caribbean have limited adaptive capacities as they face political instability caused by high social inequality, crime, corruption, and intra-state conflicts.

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Europe

As one of the most developed and most densely populated regions in the world, Europe makes heavy use of its resources, resulting in difficult trade-offs and negative consequences for the environment and ecosystems. Land is used for settlements, agriculture and dense infrastructure, creating problems of soil degradation. Water resources are stressed due to unsustainable agricultural practices. Despite nature protection policies, Europe continues to lose biodiversity at an alarming pace. Some of these trends are exacerbated by climate change, which is expected, for instance, to lead to shifts in water availability.

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Global Issues

Resource scarcities, environmental pollution and climate change are not limited by national borders, but often have a transboundary or even global impact. These issues interact with political stability, governance structures and economic performance, and can trigger or worsen disputes and violent conflicts. Exacerbating some of these trends, climate change is likely to lead to the degradation of freshwater resources, declines in food production, increases in storm and flood disasters and environmentally induced migration. All these developments pose potential for conflict.

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Middle East & North Africa

The geopolitical position of the Middle East and North Africa (MENA), its fossil fuel resources, high population growth and the political changes spurred by the Arab Spring all make the region one of the most dynamic in the world. Nevertheless, it is also one of the most arid and environmentally stressed. Dwindling water resources, limited arable and grazing land, high pollution from household and industrial waste, remnants of conflicts and increasing desertification are key environmental challenges.

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North America

Climate change has various impacts on the three North American countries of Canada, Mexico and the US. Canada and the US have well-developed adaptive capacities and foster the strengthening of capacities in other regions as well. With high per capita emissions, these two countries also bear a greater responsibility for a changing climate. Mexico has a sound national strategy for climate change adaptation, yet fewer capacities than Canada and the US. The poorer and rural populations of Mexico are especially vulnerable to climate change, due to an increased sensitivity and a lower adaptive capacity.

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Oceania & Pacific

In Oceania, population growth and economic development trends put a strain on oceanic and island ecosystems. Freshwater scarcity, overexploitation of fisheries, loss of land biodiversity, forests and trees, invasive species, soil degradation, increasing levels of settlement, poor management of solid and hazardous waste and disproportionate use of coastal areas are some of the problems. Climate change exacerbates most of these trends, while also raising questions about the future sovereignty of some island states.

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South America

South America has diverse and unique ecosystems and is very rich in biodiversity. Weak natural resource management, land disputes and extreme weather events bring about significant challenges for the region. While South America accounts for relatively few CO2 emissions, the changing climate will alter its ecosystems and greater climate variability will lead to more hurricanes, landslides, and droughts.

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Sub-Saharan Africa

In many African states, environmental security issues rank high on the political agenda. Throughout the continent, countries suffer from water scarcity, food insecurity and energy poverty. These chronic and worsening resource scarcities have severe livelihood implications and are exacerbated by political conflicts over access to and control over these resources. Climate change may seriously threaten political and economic stability in Africa. It may also put a severe strain on the capacities of states and societies to co-ordinate activities, to communicate and to organize.

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