Page 27 - bneMag Oct23

bne October 2023 Companies & Markets I 27
calling for a total overhaul of the world’s energy system.
One of the low hanging fruits to reduce the use of fossil
fuels is to end the system of subsidies that fossil fuels enjoy in many markets. An IMF analysis last year found the
total subsidies for oil, gas and coal in 2022 were $7 trillion, equivalent to 7% of global GDP and almost double what
the world spends on education. While governments have promised to end the subsidies little action has been taken. Last year alone Europe spent over €1 trillion on direct energy subsidies to protect consumers from the soaring price of gas that decupled as a result of the gas wars with Russia. The G20 poured a record $1.4 trillion into fossil fuel subsidies in 2022, according to an estimate by the International Institute for Sustainable Development think-tank.
The subsidies may have protected consumers from the shock of spiking prices, but they also disincentivise consumers from reducing their energy use.
In addition, there are indirect subsidies that make up 80% of the total that deal with cleaning up the damage caused by fossil fuels through climate change and air pollution.
The IMF analysis found petrol and other oil products accounted for half of explicit subsidies in 2022, with
coal accounting for 30% and fossil gas 20%. The biggest subsidisers of fossil fuels were China, the US, Russia, the EU and India, The Guardian reports. The analysis calculated that ending fossil fuel subsidies would cut emissions by 34% by 2030 compared with 2019 levels.
Ending the energy subsidies should be the centrepiece of reforming the energy system to move away from fossil fuels, yet these reforms have been largely ignored so far.
Phasing out fossil fuels completely remains hugely controversial and a serious attempt to force the measure
through is likely to be blocked by multiple governments.
An attempt to push through just this measure at last year’s COP27 failed and as COP28 will be held in the UAE, a major oil producer, so far the COP28 literature released ahead of the summit has avoided the subject completely.
However, not only is that not happening, in Europe fuel use is going in the opposite direction as a result of the war in Ukraine. Germany has followed through on the controversial decision to close its six nuclear power plants (NPPs) and
has restarted its coal-fired plants to replace lost Russian gas imports. Germany is currently burning an all-time record amount of coal to keep the economy powered. And it’s not just Germany: Turkey overtook Germany and Poland in June to become Europe's top producer of electricity generated at coal-fired plants.
COP28 last chance
The global stocktake will form the basis of negotiations at the next UN climate summit, Cop28, to be held in Dubai in November.
The stocktake report will be the centrepiece of the summit which is the next, and probably the last, chance to save the planet from a devastating environmental disaster.
The global stocktake is not the only key deliverable of COP28. The conference also needs to make progress in several other workstreams: hammering out the details of the loss and damage finance facility, driving towards a global goal on finance, accelerating both an energy and a just transition, closing the massive emissions gap, just to name a few, the report says.
“The success of the global stocktake will ultimately determine the success of COP28. It is the defining moment of this year, this COP and – as one of the only two stocktaking moments in this decisive decade of climate action – ultimately pivotal to whether or not we meet our 2030 goals,” the UN report said.
EU’s crisis funds depleted by climate-related chaos
bne IntelliNews
The European Union’s emergency aid reserve is repeatedly being depleted as the number and severity of climate related disasters and extreme weather events has increased sharply in recent years.
European Commissioner for Crisis Management Janez Lenarcic pointed out on September 12 that the EU’s disaster response system, the EU Civil Protection Mechanism, is already working at full operational level.
“Over just two years, requests for assistance have increased by 400%. And resources are strained to its limits. Soon we might not be able to help where needed. Clearly, we must continue to strengthen our collective disaster response capacities,” Lenarcic told the European Parliament.
In both 2021 and 2022, the bloc’s emergency aid reserve was completely used up, and 2023 has already seen several severe emergencies related to the climate crisis.
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