Investors Call for End to Fossil Fuel Subsidies, Wind Power Capacity Rises
UN Photo/Eskinder Debebe
story highlights

Investors with over USD$2.8 trillion under management called on G20 countries to end fossil fuel subsidies.

Renewable energy industry associations report that 90% of new energy installations in Europe were from renewable sources, and US witnessed one of the largest increases in wind farms in 2016.

18 February 2017: Calls and actions to balance the energy ledger emerged recently. On one side, investors and researchers highlighted the negative impacts of government support to fossil fuels and, on the other, reports showed record-breaking increases in installation of renewable energy, especially wind power.

In terms of ending government support for fossil fuels, investors and researchers called for action, and highlight the benefits of ending fossil fuels, in line with SDG 12.c (rationalize inefficient fossil-fuel subsidies that encourage wasteful consumption by removing market distortions, in accordance with national circumstances, including by restructuring taxation and phasing out those harmful subsidies, where they exist, to reflect their environmental impacts, taking fully into account the specific needs and conditions of developing countries and minimizing the possible adverse impacts on their development in a manner that protects the poor and the affected communities).

A group of investors with over US$2.8 trillion in assets under management released a statement urging the Group of 20 (G20) to phase out fossil fuel subsidies and public funding for fossil fuels. The group called for the 2017 G20 communiqué to state that, by 2020, G20 countries will identify a clear timeline for the full phase out of all fossil fuel subsides, and for ending domestic and international public finance for oil, gas and coal production. According to the group, all G20 members should follow the lead of the US and China and complete fossil fuel subsidy peer reviews by the end of 2018. Characterizing fossil fuel subsidies as “notoriously inefficient,” the statement stresses these subsidies decrease industries’ competitiveness and increase the risk of stranded assets while undermining the effect of carbon prices. [Statement to G20 to Phase Out Fossil Fuels]

An IISD and ODI study finds that completely removing subsidies to fossil fuel production globally would reduce global CO2 emissions by 37Gt over 2017-2050, roughly the same amount emitted around the world in a year.

Focusing on the incongruity between carbon prices and fossil fuel subsidies, a study published by the International Institute for Sustainable Development (IISD) and the Overseas Development Institute (ODI) takes on “zombie energy” – energy that only sees the light of day because of government support, because without such support, it would be uneconomical to extract. As a low-end estimate, the report finds that completely removing subsidies to fossil fuel production globally would reduce global emissions of carbon dioxide (CO2) by 37Gt over 2017-2050, roughly the same amount emitted around the world in a year. [IISD and ODI Report: Zombie Energy: Climate Benefits of Ending Subsidies to Fossil Fuel Production]

On the other side of the energy ledger, reports from renewable industry groups reveal considerable increases in the capacity of renewable energy, particularly in new wind farms. WindEurope reports that that 90% of newly installed power capacity in the EU in 2016 came from renewable energy sources. Of that new capacity, wind comprised nearly half of the total and, with solar, biomass and hydro totaled 86%, up from the previous record of 79% in 2014. Germany was a hot spot for installing new wind farms, amounting to 44% of the total installations in the EU last year. Other countries set new records for wind power installation, notably France, Finland, Ireland, Lithuania and the Netherlands, which installed the Gemini project off its coast, the largest wind project in Europe. [WindEurope Report: 2016 Annual Statistics]

While capacity increases, energy consumption also increasingly relies on renewable energy. One of many findings of the second State of the Energy Union report published by the European Commission (EC) is that 16% of the EU’s gross final energy consumption is from renewable sources. The State of the Energy Union is an annual report to track progress on energy efficiency and renewable energy as part of the Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change Policy adopted in 2015. It provides information relevant to SDG 13 (climate action) and SDG 7 (affordable and clean energy). The report shows progress toward climate and energy targets, and continued decoupling of economic growth from greenhouse gas (GHG) emissions, as emissions decreased 22% from 1990-2015 while the economy grew by 50%. [EC Second Report on the State of the Energy Union]

Record numbers in relation to wind energy also came from the other side of the Atlantic. The American Wind Energy Association (AWEA) reported that the last quarter of 2016 saw the second-strongest growth ever in new wind installations. Surpassed only by the fourth quarter of 2012, the wind industry installed 6,478 MW of wind capacity as 19 states commissioned 47 projects, led by Texas, Oklahoma and Kansas. The report highlights a future promising continued increases in the capacity of wind power, as wind power projects with a combined capacity of 18,344 MW are either under construction or in a stage of advanced development. This future growth will help realize SDG 7.2 to increase substantially the share of renewable energy in the global energy mix by 2030. [AWEA US Wind Industry Fourth Quarter 2016 Market Report]

related posts