IEA chief says scrap fossil fuel subsidies or face catastrophe

As academics warn the world could exceed "safe" temperature levels in our lifetimes, the chief economist of the International Energy Agency (IEA) has urged the world to slash hundreds of billions of dollars of fossil fuel subsidies or face catastrophe.

Fatih Birol, speaking in an interview with EurActiv, says that the "$409 billion equivalent of fossil fuels subsidies in place around the world "encourage developing countries - where the bulk of the energy demand and CO2 emissions come from – [towards a] wasteful use of energy” and calls for their abolition.

He says that cutting these subsidies in major non-OECD countries is “the one single policy item” which could help decrease the rate of increase of global warming, so that it stays within "safe" limits.

These limits are estimated to be around 2 degrees Celsius above pre-industrial levels.

The likelihood of dangerous warming

Two papers, to be published in the latest edition of the journal Nature are warning that emissions could reach much higher temperatures during the lifetimes of many people alive today.

This could mean that "large parts of Eurasia, North Africa and Canada could potentially experience individual five-year average temperatures that exceed the 2 degree Celsius threshold by 2030 -- a timescale that is not so distant," one paper says.

Two degrees was the maximum limit set at the Copenhagen COP15 UNFCCC summit in 2009, and was reckoned to equate to a concentration of greenhouse gases in the atmosphere of 450 parts per million (ppm).

It is considered just about bearable, but with considerable costs.

Many consider this level itself to be dangerously risky and would prefer the limit to be 1.5 degrees Celsius, which equates to 350ppm.

The papers find that "most of the world's land surface is very likely to experience five-year average temperatures that exceed 2 degrees above pre-industrial levels by 2060" at the current rate of increase.

A 3.5 degree increase would cause “irreversible impacts”, such as the mass extinction of an estimated 40%-70% of the world’s species and rendering the equatorial belt largely uninhabitable, according to the Inter-governmental Panel on Climate Change.

The New Zealand scientists say that only if emissions are "substantially lowered", will the two degree threshold possibly be delayed by "up to several decades".

The second paper, by Zurich's Institute for Atmospheric and Climate Science, the Potsdam Institute for Climate Impact Research and the Hadley Centre of the Meteorological Office, calculates that to achieve a greater than 66% chance of limiting temperature rise by this amount, global emissions will probably need to peak before 2020 and fall to about 44 gigatonnes of carbon dioxide equivalent by 2020.

Reducing fossil fuel subsidies

This puts Birol's call into perspective.

Speaking in advance of the release of the IEA's World Energy Outlook 2011 report on 9 November, he said that it will say that cutting fossil fuel subsidies would "help renewable energies such as solar and wind power to get a bigger market share".

The IEA's analysis finds that “the door for a 2 degrees trajectory may be closing if we do not act urgently and boldly,” Birol said.

The report examines seven scenarios. "“In our central scenario, seven countries introduce some form of carbon pricing which brings us to a 3.5 degree trajectory,” he explained.

“But if we want to keep the temperature increase to 2 degrees, many more countries need to do so. The most important condition is that there’s coordinated international action in place.”

The world in 2008-10 was subsidising fossil fuels by almost 13 times more than renewable energy sources such as wind and solar power and biofuels, according to Bloomberg New Energy Finance.

Fossil fuels received $557 billion compared to $43-46 billion for renewables.

Rather than going down, fossil fuel subsidies are increasing. The IEA expects them to reach $660 billion, or 0.7% of global GDP by 2020.

Reducing the subsidy would cut energy demand by 4.1% and CO2 emissions by 1.7 gigatonnes, with consequent increases in energy efficiency and more investment available for renewables.

Most of the subsidies are actually in the less developed countries, trying to compete with the developed ones.

Green Climate Fund

The United Nation's committee responsible for designing the £100bn fund which developing countries will use to help them tackle climate change before 2020, has produced its draft proposals, but not to unanimous agreement.

This fund was agreed at the COP15 and COP16 summits in Copenhagen (2009) and Cancun, Mexico (2010) and discussion of the draft will be a highlight of this year's summit in Durban, South Africa, beginning in six weeks.

However, the United States and Saudi Arabia have reduced their support for the overall design of the fund.

The draft was welcomed by Christiana Figueres, executive secretary of the U.N. Framework Convention on Climate Change.

"The Committee ended its work by submitting for consideration and approval in Durban both a draft instrument for the Green Climate Fund and recommendations on transitional arrangements to get it launched quickly," she said.

Developing countries are generally satisfied with most of the wording, especially that the fund should have its own legal status and independent secretariat, but disagreement remains over access to the funds, including the need to minimise the involvement of the Global Environment Facility and the World Bank.

Pa Ousman Jarju, chair of the Least Developed Countries negotiating block at the UN climate change talks says: “Enhanced direct access would allow more devolved decision-making to reflect local and national concerns and it would enable countries to integrate the funding into their national plans and strategies for dealing with climate change.”

For these reasons, Trevor Manuel the former finance minister of South Africa, who co-chaired the meeting on administering the fund with Kjetil Lund of Norway, called the outcome "sub-optimal".

Germany said that the committee’s failure to formally agree a design “will likely result in not having the Green Climate Fund this year or the next”.

Former chief of the UN climate change convention Yves de Boer has also criticised the fund.

He told the UN Environment Programme Finance Initiative event in Washington, DC last Wednesday, that the GCF “is going to be governed by a bunch of climate change negotiators, rather than by a lot of people that understand economics.

“The whole debate is around grant-based finance, instead of about how you catalyse significant funding, and basically the approach is to keep the private sector out - to the extent that you can - rather than to make this a consortia of public and private financing.”

The U.S. negotiators agree with him. They want developing countries as well as developed countries to contribute to the fund and for the private sector to be able to engage more. They also questioned the section on the fund having its own juridical personality.

But developing countries are suspicious. They believe the engagement of the private sector would open the potential for funds to be diverted away from developing countries towards developed countries’ companies and financial institutions, bypassing their governments.

If finally agreed, the fund will be used only for mitigation and adaptation initially, while many developing countries also want to use it for technology and capacity building, the very tactic which the IEA's Birol is calling for.

IEA chief says scrap fossil fuel subsidies or face catastrophe

As academics warn the world could exceed "safe" levels in our lifetimes, the chief economist of the International Energy Agency (IEA) has urged the world to slash hundreds of billions of dollars of fossil fuel subsidies or face catastrophe.

Fatih Birol, speaking in an interview with EurActiv, says that the "$409 billion equivalent of fossil fuels subsidies in place around the world "encourage developing countries - where the bulk of the energy demand and CO2 emissions come from – [towards a] wasteful use of energy” and calls for the abolition.

He says that cutting these subsidies in major non-OECD countries is “the one single policy item” which could help decrease the rate of increase of global warming, so that it stays within "safe" limits.

These limits are estimated to be around 2 degrees Celsius above pre-industrial levels.

The likelihood of dangerous warming

But two papers, to be published in the latest edition of the journal Nature are warning that emissions could reach much higher temperatures during the lifetimes of many people alive today.

This could mean that "large parts of Eurasia, North Africa and Canada could potentially experience individual five-year average temperatures that exceed the 2 degree Celsius threshold by 2030 -- a timescale that is not so distant," one paper says.

Two degrees was the maximum limit set at the Copenhagen COP15 UNFCCC summit in 2009, and was reckoned to equate to a concentration of greenhouse gases in the atmosphere of 450 parts per million (ppm).

It is considered just about bearable, but with considerable costs.

Many consider this level itself to be dangerously risky and would prefer the limit to be 1.5 degrees Celsius, which equates to 350ppm.

The papers find that "most of the world's land surface is very likely to experience five-year average temperatures that exceed 2 degrees above pre-industrial levels by 2060" at the current rate of increase.

A 3.5 degree increase would cause “irreversible impacts”, such as the mass extinction of an estimated 40%-70% of the world’s species and rendering the equatorial belt largely uninhabitable, according to the Inter-governmental Panel on Climate Change.

The New Zealand scientists say that only if emissions are "substantially lowered", will the two degree threshold possibly be delayed by "up to several decades".

The second paper, by Zurich's Institute for Atmospheric and Climate Science, the Potsdam Institute for Climate Impact Research and the Hadley Centre of the Meteorological Office, calculates that to achieve a greater than 66% chance of limiting temperature rise by this amount, global emissions will probably need to peak before 2020 and fall to about 44 gigatonnes of carbon dioxide equivalent by 2020.

Reducing fossil fuel subsidies

This puts Birol's call into perspective.

Speaking in advance of the release of the IEA's World Energy Outlook 2011 report on 9 November, he said that it will say that cutting fossil fuel subsidies would "help renewable energies such as solar and wind power to get a bigger market share".

The IEA's analysis finds that “the door for a 2 degrees trajectory may be closing if we do not act urgently and boldly,” Birol said.

The report examines seven scenarios. "“In our central scenario, seven countries introduce some form of carbon pricing which brings us to a 3.5 degree trajectory,” he explained.

“But if we want to keep the temperature increase to 2 degrees, many more countries need to do so. The most important condition is that there’s coordinated international action in place.”

The world in 2008-10 was subsidising fossil fuels by almost 13 times more than renewable energy sources such as wind and solar power and biofuels, according to Bloomberg New Energy Finance.

Fossil fuels received $557 billion compared to $43-46 billion for renewables.

Rather than going down, fossil fuel subsidies are increasing. The IEA expects them to reach $660 billion, or 0.7% of global GDP by 2020.

Reducing the subsidy would cut energy demand by 4.1% and CO2 emissions by 1.7 gigatonnes, with consequent increases in energy efficiency and more investment available for renewables.

Most of the subsidies are actually in the less developed countries, trying to compete with the developed ones.

Green Climate Fund

The United Nation's committee responsible for designing the £100bn fund which developing countries will use to help them tackle climate change before 2020 has produced its draft proposals, but not to unanimous agreement.

This fund was agreed at the COP15 and COP16 summits in Copenhagen (2009) and Cancun, Mexico (2010) and the draft will be discussed at this year's summit in Durban, South Africa, beginning in six weeks.

However, the United States and Saudi Arabia have reduced their support for the overall design of the fund.

The committee tasked with the design work has met four times, and completed its work last week.

Examination of the draft will be a highlight of the Durban talks.

The draft was welcomed by Christiana Figueres, executive secretary of the U.N. Framework Convention on Climate Change.

"The Committee ended its work by submitting for consideration and approval in Durban both a draft instrument for the Green Climate Fund and recommendations on transitional arrangements to get it launched quickly," she said.

Developing countries are generally satisfied with most of the wording, especially that the fund should have its own legal status and independent secretariat, but disagreement remains over access to the funds, including the need to minimise the involvement of the Global Environment Facility and the World Bank.

Pa Ousman Jarju, chair of the Least Developed Countries negotiating block at the UN climate change talks says: “Enhanced direct access would allow more devolved decision-making to reflect local and national concerns and it would enable countries to integrate the funding into their national plans and strategies for dealing with climate change.”

For these reasons, Trevor Manuel the former finance minister of South Africa, who co-chaired the meeting on administering the fund with Kjetil Lund of Norway, called the outcome "sub-optimal".

Germany said that the committee’s failure to formally agree a design “will likely result in not having the Green Climate Fund this year or the next”.

Former chief of the UN climate change convention Yves de Boer has also criticised the fund.

He told the UN Environment Programme Finance Initiative event in Washington, DC last Wednesday, that the GCF “is going to be governed by a bunch of climate change negotiators, rather than by a lot of people that understand economics.

“The whole debate is around grant-based finance, instead of about how you catalyse significant funding, and basically the approach is to keep the private sector out - to the extent that you can - rather than to make this a consortia of public and private financing.”

The U.S. negotiators agree with him. They want developing countries as well as developed countries to contribute to the fund and for the private sector to be able to engage more. They also questioned the section on the fund having its own juridical personality.

But developing countries are suspicious. They believe the engagement of the private sector would open the potential for funds to be diverted away from developing countries towards developed countries’ companies and financial institutions, bypassing their governments.

If finally agreed, the fund will be used only for mitigation and adaptation initially, while many developing countries also want to use it for technology and capacity building, the very tactic which the IEA's Birol is calling for.