G20 Spends $88 Billion a Year on Fossil-Fuel Exploration

The G20 group of major economies spend $88 billion a year on fossil-fuel exploration, five years after pledging to phase out industry subsidies, a study showed.

Spending of $17 billion and $11.3 billion by state-backed oil companies Saudi Arabian Oil Co. and Petroleo Brasileiro SA are the biggest components in the funding compiled by the Overseas Development Institute and Oil Change International. The total also includes subsidies and tax breaks from governments, and public financing through development banks.

The expenditure is adding to carbon emissions at a time when those same governments are trying to devise a new global agreement to limit global warming to 2 degrees Celsius (3.6 degrees Fahrenheit) since industrialization. United Nations scientists last week said the world can only burn a limited amount of fuel before it becomes unlikely that target is met.

“Not only are companies continuing to look for fossil fuels and trying to find new reserves, but governments are putting more money and support towards exploration than companies, which is basically governments fueling dangerous climate change,” Shelagh Whitley, a research fellow at the ODI, said in an interview.

G20 nations in 2009 agreed to phase out “inefficient fossil-fuel subsidies that encourage wasteful consumption,” without defining their criteria. Ministers from those countries and another 170 will gather in Lima, Peru, next month to draft early texts of an agreement to fight climate change that they aim to complete at the end of 2015 in Paris.

State Subsidies

In terms of direct state subsidies and tax breaks, the U.S. led with about $5.1 billion a year, according to the report. Australia provided at least $2.9 billion and Russia $2.4 billion, the researchers said. Japan had the highest total in the public-finance category, with $5.3 billion.

“The G20 countries are continuing to fund fossil fuel exploration, which is particularly dangerous in the context of unburnable carbon,” Whitley said. “All of these instruments that they’re using to support looking for new fossil fuels are the same instruments they could use to support renewable energy. We’re calling for them to make that shift.”

The researchers relied on broad definitions of a subsidy, using methods utilized by the World Trade Organization and the Organization for Economic Cooperation and Development, she said.

The ODI in London is a nonprofit research group studying international development and humanitarian affairs. Oil Change International is a Washington-based nonprofit researching fossil-fuel costs and campaigning for a move to clean energy.

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