The G7's Pledge to End Fossil Fuel Subsidies by 2025: Mere Rhetoric or a Sign of Post-Paris Momentum?

Abstract

At their Ise-Shima Summit on 26-27 May 2016, the G7 leaders agreed to end fossil fuel subsidies (FFSs) and called on other countries to do the same. This agreement is the latest in a series of non-binding intergovernmental agreements to phase out FFSs since the 2009 G20 Summit. The Ise-Shima Agreement, however, represents the first attempt to set a specific deadline for phasing out FFSs at the intergovernmental level. In a statement released shortly after its announcement, Sierra Club Executive Director Michael Brune hailed the agreement as “an important step forward for our climate and the millions of people around the world suffering from the effects of pollution from dirty fuels”. Shelagh Whitely of the Overseas Development Institute (ODI) called it “a new chapter in the climate history books”. This Reflection considers whether this warm reception is justified and how the substantive content of the Ise-Shima Agreement differs from past agreements to phase out FFSs.

Keywords: Fossil Fuel Subsidies, Paris Agreement, Ise-Shima Agreement, G7, Subsidy Reform, Energy Transition

JEL Classification: H70, K00