Fossil fuels rank high in G20's Covid-19 recovery plans

G20 governments have allocated at least US$151 billion to fossil fuels since the pandemic started, largely overlooking renewables

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G20 fossil fuels

One oil pump jack pumping crude out of the ground in Neuquen, Argentina (image Alamy)

Most of the world’s 20 leading economies, including Brazil, Mexico and Argentina, are choosing to support fossil fuels over clean energy as part of their coronavirus economic recovery packages, although China is outspending on renewables by a ratio of 4 to 1, according to data collected by Energy Policy Tracker.

The initiative, developed by a group of 14 NGOs from around the globe, shows G20 governments’ support for fossil fuels totaling at least US$151 billion. Of these, only 20% pledged support conditional on climate action. Meanwhile, countries have committed US$89 billion to clean energy, 81% of which is not covered by clear environmental safeguards.

The funds flow to energy production and consumption through direct budgetary transfers, tax expenditure, loans, loan guarantees and various hybrid mechanisms. These combine with government policies that already existed before the pandemic and entrench high-carbon energy.

“The COVID-19 crisis and governments’ responses to it are intensifying the trends that existed before the pandemic struck,” said Ivetta Gerasimchuk, the project lead. “National and subnational jurisdictions that heavily subsidised the production and consumption of fossil fuels in previous years have once again thrown lifelines to oil, gas and coal.”

The website considers over 200 individual policies from G20 countries, combining the amounts committed through each policy to generate total aggregate figures. It split the data into unconditional and conditional backing, as some countries like France have asked industries for further climate action as a condition to granting the funds.

These policies will delay economic recovery, the energy transition, and progress toward establishing the foundations of a low-carbon economy

While noises about the need for a ‘green recovery’ after the coronavirus have grown louder in policy circles, Energy Policy Tracker shows that in reality, fossil fuel producers and high-carbon sectors such as airlines, are receiving 70% more recovery aid than clean energy. The website will be weekly updated to monitor the trend.

“In spite of the great number of clean policies being approved by governments in recent months, the tracking system shows how the fossil fuel industry has continued to aggressively lobby policy-makers,” said Angela Picciariello, senior research officer at the Overseas Development Institute (ODI). “This has resulted in some so-called conditional fossil fuel policies that nevertheless lock-in dangerous emissions for decades to come.”

79%

the global emissions of which the G20 is responsible for

G20 economies represent more than 80% of global GDP and three-quarters of global trade. The group is also responsible for 79% of global emissions and therefore has a major role in fulfilling the goals of the Paris Agreement. However, existing G20 commitments are insufficient to prevent a global average temperature increase of more than 2C by the end of this century, compared to pre-industrial levels.

Emissions from energy, industry, transport, buildings, and agriculture in G20 nations rose in 2018, demonstrating a clear lack of action to tackle climate change, according to the Brown to Green Report coordinated by the organisation Climate Transparency. This is despite countries having the technical expertise and economic incentives necessary to lower them, new research has found.

“Recovery spending must dramatically change course to support clean energy as an investment in the future, instead of subsidising the polluters of the past. Fossil fuels were a bad investment even before the pandemic began,” said Alex Doukas, a program director at Oil Change International.

Latin America’s trajectory

The tracker found that Brazil has so far allocated US$780 million to clean energy sources and US$2.6 billion to other energies, mainly for consumption, biofuel producers and emergency financing for the electricity sector. There were other fossil fuel-supporting policies but they couldn’t be quantified.

Meanwhile, Mexico has spent up to US$3 billion to support fossil fuels since the pandemic began, granting a fiscal stimulus to state-owned oil company Pemex and backing the construction of the Dos Bocas refinery. Renewables have stopped expanding despite their huge potential.

“These policies will delay economic recovery, the energy transition, and progress toward establishing the foundations of a low-carbon economy and, therefore, Mexico's development,” said Juan Carlos Belausteguigoitia, head of the energy center at Mexico’s Technological Institute (ITAM).

The tracker couldn’t quantify the spending of Argentina’s Covid-19 recovery packages but found policies that support fossil fuels and none for clean energy. Oil trades domestically at US$45, a government move that aims to keep the oil and gas industry profitable despite drops in price and consumption.

Outside Latin America, other countries prioritising fossil fuels include Australia, which spends US$480 million annually and only US$122 million on renewables, Canada, with US$11.9 billion granted to fossil fuels and US$223 million to clean energy and South Korea, which allocates US$4.9 billion to coal, gas and crude oil and US$1.3 billion to renewables.

However, some proved to be on the right track. China spent US$17 billion in supporting clean energy and US$4 billion in fossil fuels. Jin Zhen, a researcher at the Institute of Global Environmental Strategy, highlighted investment in national railway development and water conservation.

Satoshi Kojima, principal coordinator at the Japan-based Institute for Global Environmental Strategies (IGES), said: “We are happy to see that China, Germany, India, Japan, South Korea, and the UK have already approved some green recovery policies that provide lasting and decent green jobs,” adding; “Further efforts to mainstream this strategy are desirable.”