Multinational insurers worth over $1.2 trillion have asked G20 governments to abandon fossil fuel subsidies and tackle human causes of climate change. They are yet another addition to last last week’s list of groups with $13 trillion of assets in management advocating the same decision.
The caution comes as the G20 prepare to meet in Hangzhou, China on 5th and 4th of September .
Aviva, Aegon and Amlin signed the warning letter together with the Institute and Faculty of Actuaries (IFoA) and Open Energi. British think tank Overseas Development Institute (ODI) published the open warning letter on its site.
The letter quotes a recent report from the ODI on government spending for fossil fuels. ODI recently concluded that G20 governments spend $444 billion every year on fossil fuel production subsidies.
Insurers recognise the impact of climate change and its connection to fossil fuels and are pressing G20 governments to legalise fossil fuel reduction as detailed in the Paris agreement of 2015 and discussed as far back as 2009. The international community hopes that the top two emitters US and China release plans to cut emissions.
Aviva CEO Mark Wilson said: “Climate change in particular represents the mother of all risks – to business and to society as a whole. And that risk is magnified by the way in which fossil fuel subsidies distort the energy market. These subsidies are simply unsustainable.”
The letter mentions: “we were pleased to see …the long-standing G20 commitment to phase out fossil fuel subsidies…However, given the urgency of the climate change crisis, underscored by the Paris Agreement reached in December of 2015, the next steps on this commitment are long overdue”.
Cutting emissions is expensive because the world economy is largely dependent of oil, gas and coal as about 80% of total energy sources. Activists and most global heads of government agree in gradually switching and further investing in renewable energies in the future, but policy change has been slow.
Insurance companies ask in the letter for “a clear timeline for the full and equitable phase-out by all G20 members of all fossil fuel subsidies by 2020”, “except in extreme cases where there is clearly no other viable option for increasing energy access to the poor.”
“Fossil fuel subsidies encourage wasteful consumption, reduce our energy security, impede investment in clean energy sources and undermine efforts to deal with the threat of climate change.”
The Organisation for Economic Co-operation and Development (OECD), reports that its member states (including the EU, USA, Canada, Mexico and Turkey) contribute $160-200 billion yearly to the production of coal, oil and gas.
Finally, the IMF gave estimates a global amount of $5.3 trillion per year, a “shocking” $10 million per minute. It is estimated that just the global stock market value of oil gas and coal companies is worth up to $5 trillion.
IMF estimates from 2014 value the global economy at $106 trillion.
Last week, investors managing more than $13 trillion of assets urged the G20 to ratify the Paris climate deal by the end of 2016 to help avert droughts, floods, mudslides and rising sea levels. Totalling 130 investors in six coalitions, these included various national pension schemes with stakes in long term investment funds.
“Governments have a responsibility to work with the private sector to ensure that this transition happens fast enough to catalyse the significant investment required to achieve the Paris agreement’s goals.”
UN secretary general Ban Ki-moon echoed the same message earlier in 27 January 2016.
“Governments, businesses and investors around the world are realizing that the transformation to low-emission, climate-resilient growth is inevitable, beneficial and already under way.”
“I challenge investors to double – at a minimum – their clean energy investments by 2020.”
“Investors and businesses that redirect resources to low-carbon, climate-resilient growth will be the economic powerhouses of the 21st century.” ”Those that fail to do so will be on the losing side of history.”
United Nations says that 23 small nations representing only 1.1 percent of global emissions have completed the formalities. The deal requires at least 55 nations representing 55 percent of global emissions to become law.
Featured image credit: A labourer works at a coal factory in Baicheng county, northwest China’s Xinjiang Uygur Autonomous Region, January 7, 2007. Picture taken January 7, 2007.
CHINA DAILY/CHINA OUT REUTERS
6409 oil pumps timelapse sunset 2 by Manuel Hurtado