Finland calls for phase-out of fossil fuel subsidies

In the lead-up to a major climate conference in Paris a coalition of governments is calling for the phase-out of subsidies to fossil fuels.

A group of eight countries known as the Friends of Fossil Fuel Subsidy Reform have launched a Communique encouraging governments to prioritize the reform of fossil fuel subsidies in a move ahead of the United Nations Climate Change Conference in Paris this year.  The Friends are encouraging other governments to endorse the statement.  France and the U.S. became the first countries outside the Friends group to do so, bringing more weight to the Communique.

Fossil fuel subsidies are common especially in the developing countries.  According to the International Energy Agency, fossil fuel subsidies amount to around USD 550 billion a year at the global level (IEA, 2014). Fossil fuel subsidies hamper economic growth and cause serious repercussions, such as climate impacts.  In addition, fossil fuel subsidies restrain the balanced development and introduction of renewable energy forms.  Even a partial phase-out would reduce greenhouse gas (GHG) emissions by 12 percent by 2020.  Often the benefits of subsidies disproportionately benefit wealthier households, which consume more energy.   In addition, they drain scarce public resources that could be better spent on other sustainable development goals. 

The Communique seeks to underline the substantial climate benefits of the reform, as well as other economic, social and environmental advantages.  The signatories can also bring forward their own initiatives in connection with the Communique.

Under-secretary of state Tuomas Saarenheimo from the Ministry of Finance, who represented Finland at the event, stressed that fossil fuel subsidies matter - they are globally significant, taking up a large percentage of government spending in some countries. He noted that Finland has worked hard to phase out environmentally damaging subsidies.  "Now, we are promoting fossil fuel subsidy reform internationally through the Communique", he said.

The trade, development and foreign ministers from New Zealand, Denmark, Sweden and Norway were present at the launch on 17 April in Washington, D.C. The French Minister of State for Development and Francophony and US Treasury Deputy Assistant Secretary General also participated in the event.

Background

Finland is a member of the 'Friends of Fossil Fuel Subsidy Reform (FFFSR)', established by New Zealand in 2010, which promotes the gradual phase-out of inefficient fossil fuel subsidies. The other Friends of Fossil Fuel Subsidy Reform are Costa Rica, Denmark, Ethiopia, Norway, Sweden and Switzerland.  The countries are committed to act as first movers, serving as an example and supporting other countries' participation in efforts to rationalise the use of fossil fuel subsidies. 

Additional information:

Malena Sell, Ministry for Foreign Affairs, tel. +358 295 351 860
Tuuli Juurikkala, Ministry of Finance, tel. +358 295 530 051
Maria Vuorelma, Ministry of the Environment, tel. +358 295 250 342

Communiqué https://www.iisd.org/sites/default/files/publications/FFSR_Communique_17_4_2015.pdf

Infographic on fossil fuel subsidy reform and climate change:
http://www.iisd.org/gsi/sites/default/files/FFSR_and_climate_infographic_snd10-12_0.jpg