Insurance Funds to G20: Stop Funding Fossil Fuels
Three of the world’s biggest insurers have called on G20 leaders to implement a time frame for the end of fossil fuel subsidies.
The G20 has already committed to phase out “inefficient fossil fuel subsidies that encourage wasteful consumption” over the “medium term.” In May, the G7 nations pledged to achieve this by 2025.
The leaders of the 20 largest economies on earth must go further, said a joint statement from multinational insurers Aviva, Aegon, and Amlin, and commit to an end to assistance for fossil fuel companies within four years.
The three companies manage $1.2 trillion in assets.
“Climate change in particular represents the mother of all risks, to business and to society as a whole,” said Aviva CEO Mark Wilson. “And that risk is magnified by the way in which fossil fuel subsidies distort the energy market. These subsidies are simply unsustainable.”
Estimates of fossil fuel subsidies vary widely depending on the definition of a subsidy. The OECD reports that its member states contribute $160 billion to $200 billion each year to the production of coal, oil, and gas. But the International Monetary Fund (IMF) has said this neglects to account for the damage to the environment and human health for which governments carry the cost. The IMF estimates this to amount to a staggering $5.3 trillion a year, or $10 million per minute.
“We’re calling on governments to kick away these carbon crutches, reveal the true impact to society of fossil fuels and take into account the price we will pay in the future for relying on them,” said Wilson.
Shelagh Whitley, research fellow at the Overseas Development Institute (ODI), said the current G20 pledge to end fossil fuel subsidies was “empty” if it lacked a concrete timeline. ODI’s own estimate puts fossil fuel subsidies at $444 billion each year.
“These subsidies fuel dangerous climate change,” said Whitley. “If we are to have any chance of meeting the 2-degree C target set at the Paris climate summit then governments need to start a program of rapid decarbonization. The finance sector recognizes the importance of moving away from fossil fuels, governments need to realize they may be the only ones left not moving.”
The statement was also signed by the Institute and Faculty of Actuaries (IFoA) and Open Energi. It comes six days after 130 investors issued a similar pre-G20 representation. In the U.S., the Sierra Club has launched a campaign call on the Obama administration to back the same target.