WTO Public Forum, 10 October 2019
Fossil Fuel Subsidies Reform: International collaboration and the link between sustainability objectives and global trade
Opening Remarks Delivered by Ambassador David Walker
On behalf of the New Zealand Permanent Mission to the WTO and the signatories to the Statement on Fossil Fuel Subsidy Reform at MC11, I would like to welcome you to today’s session. I would also like to welcome our panelists: Crispin Conroy from the International Chamber of Commerce; Steven Stone from UN Environment and Rachel Bae from the OECD.
Today’s panelists will explain how fossil fuel subsidies distort markets – discouraging the uptake of clean energy technologies thus contributing to climate change and holding us back from sustainable development. A private sector perspective will be presented and the connection to sustainable development goals will be explained. Existing international collaboration and domestic reforms will also be set out.
As our Prime Minister, Jacinda Arden recently stressed in her address to the United Nations “not since the inception of the United Nations has there been a greater example of the importance of collective action and multilateralism, than climate change. It should be a rallying cry to all of us”.
Global support for reforming fossil fuel subsidies is growing as the imperative to respond to climate change increases in urgency. The G20 and APEC members committed to action on this issue in 2009. Since then fossil fuel subsidies have received attention in the work of various international bodies including the OECD, IEA and the IMF; and groups like the Friends of Fossil Fuel Subsidy Reform, the G20, APEC, the V20, the Pacific Island Forum Leaders, and the G7 have issued statements calling for the phase out of inefficient fossil fuel subsidies.
In 2015 Leaders from all UN countries endorsed the need for fossil fuel subsidy reform in Sustainable Development Goal 12.C and the UN Secretary General has continuously highlighted fossil fuel subsidy reform as a priority issue for addressing climate change, including at the recent Climate Summit in New York.
In 2017, New Zealand and eleven other WTO Members delivered a statement at MC11, encouraging the rationalization and phase out of inefficient fossil fuel subsidies that encourage wasteful consumption.
Globally, countries are subsidising fossil fuel production and consumption to the tune of over US$500 billion annually. Subsidies make greenhouse gas emitting fuels cheaper to produce and buy, acting as an incentive to use and produce more. 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.
To recall again that in 2017, New Zealand and eleven other WTO Members delivered a statement at MC11, encouraging the rationalization and phase out of inefficient fossil fuel subsidies that encourage wasteful consumption. The statement recognizes that reform needs to take into account the specific needs and conditions of developing countries and minimize possible adverse impacts on development in a way that helps protect poor and affected communities – it is not a ‘one size fits all’ approach.
In line with our strong view that the WTO is ultimately the right forum in which to take action on fossil fuel subsidies, we continue to urge the Membership to open discussions in Geneva.
More generally, as leaders oversee their domestic implementation of SDG 12, we would suggest there could be common interest in a collective approach to fossil fuel subsidy reform in the WTO – to provide a supportive international context for domestic efforts, in a coordinated and coherent way – and we would like to explore this possibility together.
We are working to renew the statement that was delivered to MC11 at the twelfth WTO Ministerial Conference (MC12) next June. Our aim is to attract broader support for the statement, with greater regional representation.