The G20 ‘agreed that all subsidies that encourage wasteful consumption must go.’ The G20 is composed of 19 countries plus the European Union and international financial institutions. This group accounts for 80 percent of greenhouse-gas emissions, also because of fossil fuel subsidies that do not augur well for the fight against climate change whose major culprit is fossil fuel combustion.

Most of these fossil fuel subsidies come from the poor and middle-income countries. The category of ‘poor country’ comes in relation to the group of rich countries called Organisation for Economic Cooperation and Development (OECD). A country that is not included in the OECD’s roster of some 30 developed countries and advanced economies is automatically categorized as poor country.

According to the International Energy Agency (IEA), poor countries spend $310 billion a year on such fossil fuel subsidies, mainly for petrol. Ironically, these subsidies that are touted to help the poor actually ‘benefit middle-income and higher-earning urban types’ because the rural poor use little fossil fuel.

So, the G20 has decided to end subsidies on fossil fuels and use the money spent on such subsidies in other ways that could effectively help the poor.

Perhaps, the biggest benefit that will come out of the eradication of fossil fuel subsidies is the reduction in the use of fossil fuels, and thus a reduction in greenhouse gas emissions. ‘The IEA, along with the OECD, reckons that eliminating fossil-fuel subsidies would result in a 10% reduction in global greenhouse-gas emissions by 2050.’

Via Economist.com