17 October 2019

WTO Public Forum, Fossil Fuel Subsidy Reform session: International Collaboration and the Link Between Sustainability Objectives and Global Trade

Highlights

  • During the event, hosted on October 10 by the Permanent Mission of New Zealand to the World Trade Organization (WTO) as part of the WTO Public Forum, panellists identified venues within the international system for collaborating on fossil fuel subsidy reform (FFSR).
  • The session highlighted the renewal of a Ministerial Statement on Fossil Fuel Subsidies at the next WTO Ministerial Conference (MC12) in 2020 as reflecting the strong view among many that the WTO is ultimately the right forum in which to take action on fossil fuel subsidies. 
  • As reporting on the Sustainable Development Goals (SDGs) commences in 2020, the panel drew attention to an official methodology for reporting on fossil fuel subsidies (SDG Indicator 12.c.1), developed jointly by UN Environment, the Organisation for Economic Co-operation and Development (OECD) and the Global Subsidies Initiative (GSI).
Fossil Fuel Subsidies Reform: International Collaboration and the Link Between Sustainability Objectives and Global Trade
October 10, 2019

Discussing issues related to climate change and trade, the speakers at this year’s WTO Public Forum had a common diagnosis: climate change and trade communities just work in separate silos. This panel was in the spirit of identifying ways of breaking down these silos.

Fossil fuel subsidies have been in the spotlight of international forums such as the G20, G7 and Asia-Pacific Economic Partnership, where countries have recognized that subsidizing coal, gas and oil is often inefficient, incentivizing wasteful consumption. As Rachel Bae, Senior Counsellor at the OECD, noted, there is a strong rationale for why countries are pursuing FFSR, as subsidies can run counter to climate, health and social objectives, and have a distortive effect on trade.

Ambassador David Walker, New Zealand’s Permanent Representative to the WTO, stressed that the WTO was the natural locus for addressing FFSR: “Just as trade rules are used in the WTO to address industrial and agricultural subsidies, we think they have an important role to play here also.” According to the Ambassador, first steps were taken with the Ministerial Statement in support of fossil fuel subsidy reform, which New Zealand, together with 11 other WTO members, endorsed at the last WTO 11th Ministerial Conference (MC11) in Argentina, in December 2017. Ambassador Walker stressed that the renewal of this statement at WTO’s MC12 in Nur Sultan in June 2020 is a new opportunity for progress on this issue and that they were looking to attract broader support for the statement, with greater regional representation

Rachel Bae represented the OECD, which together with IISD and UN Environment was involved in developing an official methodology to support countries reporting on the SDG 12 indicator on fossil fuel subsidies.  She reminded the participants that effective FFSR starts with transparency: “Our starting point is to collect data.” In addition to the need for data collection, she stressed the importance of peer reviews to bring to light inefficient and harmful subsidy programs and identify sensible starting points for reforming them.

As official reporting on SDG progress will commence in 2020, Steven Stone, Director of the Resources and Markets Branch at UN Environment, reiterated the importance of taking stock of fossil fuel subsidies: “As part of the process of formulating the Sustainable Development Goals, the global community has agreed that this piece of information is universally needed. With the agreed methodology, nothing is holding us back anymore.” He stressed that the next 10 years will be decisive to roll out reporting and tracking across all 193 UN member states.

Notwithstanding, the panel agreed that, when it comes to reform, “you cannot have a blanket prescription, but need to think about the situation of every country individually.” The audience strongly resonated with the insight that FFSR must be accompanied by social compensation programs that safeguard the energy needs of the poor and especially vulnerable populations.

The need for concerted action and collaboration was a common sentiment among the panellists. Crispin Conroy, Representative Director of the International Chamber of Commerce, reminded the panel that collaboration should not end with state actors. Contributing the perspective of the private sector, he highlighted the roles that businesses must play in helping to address the SDGs, stressing that “We are all in it together and businesses must be part of the solution.”

Recording available here

The Friends group was formed in June 2010 to support G20 and APEC leaders’ commitments to phase out inefficient fossil fuel subsidies. The Friends encourage the G20 and APEC to implement their initiative as soon as possible, with maximum ambition and transparency.

Friends of Fossil Fuel Subsidy Reform are

  • Costa Rica
  • Denmark
  • Ethiopia
  • Finland
  • New Zealand
  • Norway
  • Sweden
  • Switzerland
  • Uruguay