7 December 2011: The Friends of Fossil Fuel Subsidy Reform group of countries and the International Institute for Sustainable Development’s (IISD) Global Subsidies Initiative organized an event titled “The Missing Piece? Fossil Fuel Subsidy Reform and Climate Change,” on the sidelines of the UN Climate Change Conference in Durban, South Africa.

The event brought together high-level government representatives from Costa Rica, Denmark, Ethiopia, New Zealand, Norway, Sweden and Switzerland.

In his opening remarks, Tim Groser, New Zealand Minister Responsible for International Climate Change Negotiations, underlined that the global value of fossil fuel subsidies to consumers is estimated at US$409 billion in 2010, according to the latest International Energy Agency (IEA) figures. He added that this is four to six times the funding required to support adaptation and mitigation efforts in developing countries.

Simon Upton, Director, Organisation for Economic Co-operation and Development (OECD) Environment Directorate, underscored that new OECD research indicates that its members provided another US$45-to-$70-billion a year in subsidies to fossil fuel producers.

René Castro, Costa Rica’s Minister of Environment, Energy and Telecommunications, said diesel subsidies to fishing fleets should be reformed as a priority, given that fishing fleets are a major contributor to over-fishing.

Wondwossen Sintayehu, Director, Law and Policy Formulation Division, Environmental Protection Authority, Ethiopia, described Ethiopia’s recent experience of subsidy reform. Noting that reform can be successful in a developing country, he stressed the importance of good strategic planning across the energy, environment, agriculture and transport sectors.

Emphasizing the value of transparency, Erik Solheim, Norway’s Minister of International Development, explained that Norway has supported a study by the Global Subsidies Initiative on subsidies to its upstream oil and gas sector. He welcomed the Friends group’s approach, which follows a scientific process involving research and dialogue, as opposed to an activist organization.

Peter Wooders, Senior Economist at IISD, said the UNFCCC offers several opportunities for progressing fossil fuel subsidy reform. He underlines that support for subsidy reform in developing countries could be provided under nationally appropriate mitigation actions (NAMAs), which include policy reforms that lead to climate change mitigation. He highlighted new reporting guidance for National Communications, and Monitoring, Reporting and Verification, which offer the opportunity to increase transparency around developing countries’ energy pricing, subsidies and subsidy reform progress.

According to IISD, short term priorities for the Friends of Fossil Fuel Subsidy Reform presented during the event include to: progress reform through the UN Conference on Sustainable Development (UNCSD, or Rio+20) process; consider increasing and diversifying its membership; and explore and develop opportunities in a range of fora, including the UNFCCC. [IISD Sources]