For the first time, the G7 group of countries, including the UK, has set a timescale for the phase out of subsidies for fossil fuels by 2025. This is an indication of how far up the global ‘agenda’ the issue of greenhouse gas emissions has risen.
In an announcement in Tokyo, the group said it was committed to “swift and successful implementation” of the Paris Agreement on climate change, which was seen as a breakthrough.
However, commentators pointed out that the target was not binding and the “warm words” needed to be backed up by steps to stop using fossil fuels.
The relevant paragraph from the G7 Ise-Shima Leaders Declaration document states: “Given the fact that energy production and use account for around two-thirds of global GHG emissions, we recognise the crucial role that the energy sector has to play in combatting climate change. We remain committed to the elimination of inefficient fossil fuel subsidies and encourage all countries to do so by 2025.” While not binding, the G7 statement suggests that could be about to change. This will surely send a strong signal to energy markets under the heading of ‘climate change.’
Increase in UK state aid for fossil fuels
A report last year found that G20 nations were responsible for $452bn (£297bn) a year in production subsidies for fossil fuels. It found the UK was the only G7 country to actually increase state aid for fossil fuels.