"We should be past the point of debate around fossil fuel subsidies. If you agree that we must act on climate change, then we can surely agree that the time for phasing out fossil fuel subsidies and reinvesting these funds to improve the wellbeing of our planet is now."
Making these greenhouse gas emitting fuels cheaper to produce and buy is an incentive to use more and discourages investment in renewable energy. Subsidising fossil fuels also uses money that governments could spend on health, education, climate adaptation and development to support a green COVID-19.
New Zealand is a leading advocate for the reduction, and ultimately elimination, of fossil fuel subsidies internationally.
"Right now, one of the most substantial roadblocks in the way of cutting emissions is fossil fuel subsidies.
A missing piece of the puzzle
It’s been said that ending subsidies on fossil fuel is one of the missing pieces of the climate change puzzle.
Removing these subsidies would substantially contribute to limiting global warming to 1.5°C degrees above pre-industrial levels — in accordance with the Paris Agreement.
There is general agreement that things need to change, but progress has been slow.
“Fossil fuel subsidies are public enemy number one for the growth of renewable energy.”
To get things moving New Zealand is harnessing global trade rules to address this pressing issue. Ninety-eight percent of world trade is bound by the rules of the World Trade Organisation. So, if new rules disciplining fossil fuel subsidies were collectively developed and introduced, there could be genuine and meaningful change for the climate and the global economy.
The road ahead
We know that transformative change takes time. Industries and workers associated with fossil fuels often fear job losses, and consumers are understandably reluctant to accept higher fuel prices.
For these reasons New Zealand acknowledges the importance of a just transition for vulnerable communities and those sectors of society that rely on fossil fuel subsidies
"We've got a real question as to why we want to be spending $500 billion each year on subsidising the oil industry to produce emissions? Why would you do that?"
We have been working hard to advance this issue at the WTO and APEC, and also encouraging G7 and G20 members to do the same. Some countries have already made enormous strides in reducing support for fossil fuels and have reaped the rewards from divesting away from fossil fuels.
This year — alongside like-minded members New Zealand will be presenting a Ministerial Statement on fossil fuel subsidy reform at the World Trade Organization to take action now. We are also working hard in APEC, as hosts, to take action to start reforming inefficient fossil fuel subsidies in the region.