News item | 09-12-2023 | 12:15
During the UN Climate Conference in Dubai (COP28), the Netherlands launched an international coalition to phase out fossil subsidies. Countries joining the coalition include the Netherlands, Austria, Belgium, Ireland, Spain, Finland, Antigua and Barbuda, Canada, France, Denmark, Costa Rica and Luxembourg.
A sustainable and CO2-free global economy requires phasing out tax and financial benefits for fossil fuels. That is why it was agreed during the 2021 Climate Summit in Glasgow to phase out inefficient fossil fuel subsidies, after the G20 countries already decided to do so in 2009.
An analysis by the Cabinet showed that in the Netherlands approximately half of all fossil benefits are tied up in international agreements, around 20 billion. If the Netherlands wants to phase out this, it will have to work with other countries. Also because it is important to prevent greenhouse gas emissions and economic activity from subsequently taking place in other places in the world. That is why the Netherlands has set up a coalition that will work together to phase out these benefits. The approach focuses on the following three pillars:
1. Transparency
The first step to ending fossil subsidies is to gain better insight per country. The member countries want to publish an overview of their fossil subsidies before the next UN Climate Conference (COP29) in 2024. Cooperation between countries and international organizations (such as IMF, OECD, WTO, IEA, IMO and ICAO) is crucial for this. This also applies to developing a calculation method that can be used by every country.
2. International agreements
The coalition works together to identify and tackle international barriers that stand in the way of phasing out fossil subsidies. The Netherlands recently conducted an inventory showing that half of all subsidies come from international agreements. Examples are the exemption from excise duty on heavy fuel oil in shipping and the exemption from excise duty on the consumption of fuel in international aviation. Other countries face the same barriers and would like to tackle this together.
3. National measures
There will be an international dialogue to share knowledge, develop national strategies for phasing out fossil benefits and strive for joint action to minimize leakage effects (the relocation of polluting economic activities). In this way, a level playing field between countries can also be maintained. This international dialogue can take place annually during COP meetings.
Minister for Climate and Energy Rob Jetten: “Fossil subsidies have no place in a clean economy and must be phased out. That is why phasing out of around 4.8 billion euros has already started in the Netherlands. At the same time, we see that half of all subsidies are tied up in international agreements and we therefore have to cooperate with other countries. That is why it is good news that today we are launching an international coalition that wants to jointly phase out fossil subsidies. We do this by creating transparency, addressing international agreements and collaborating on national phase-out processes.”