Oil subsidies on the march despite G-20 pledge – report

G-20 leaders made waves last year when they jointly pledged to phase out fossil fuel subsidies to help cut greenhouse gas emissions.

But the September meeting in Pittsburgh didn’t produce a detailed plan (that’s supposed to come later), and an International Monetary Fund report Thursday spells out how tough it might be.

The report notes that after declining in the second half of 2008 along with oil prices, petroleum subsidies are now rising alongside them. Total global subsidies are estimated to be $740 billion this year, and over 70 percent are in the G-20, the report finds.

Cutting subsidies in half could reduce emissions by as much as 17 percent by 2050.

“The potential gains are obviously higher if one takes a broader view of subsidies to include subsidies on other fossil fuels such as coal and natural gas,” the IMF report notes. But the report cautions that subsidy reform efforts – it suggests several – must mitigate the effects of higher prices on the poor.

The IMF report lays out several ways that governments can curb subsidies, like better targeting them to specific groups like the elderly and children; increased transparency; and easing back on government price-setting mechanisms.