US Opts Out of Dutch Plan to End Fossil Fuel Subsidies at COP28

(Bloomberg) -- COP28 Daily Reports:

The US opted out of a Dutch-led coalition that aims to phase out fossil fuel subsidies, starting by extricating countries from the international agreements in which they are embedded.

Around 50% of government subsidies for oil, gas and coal are a result of global pacts, like those in aviation and shipping that exempt the fuels from tax, according to a statement by the coalition launched at COP28 in Dubai. Member countries will be required to report the amount of subsidies before next year’s summit.

The Netherlands had been pushing for the US to join the group, according to people familiar with the matter. US President Joe Biden has repeatedly pressed to eliminate a raft of tax incentives for the oil and gas industry — reviving a campaign former President Barack Obama launched more than a decade ago. 

But the effort depends on support from the closely divided Congress and has been fought by oil industry leaders who argue they shouldn’t be singled out, since many of the targeted deductions are not unique to the sector and have corollaries through the tax code.

The Netherlands has been at the forefront of combating fossil fuel subsidies after it tallied its own and found they totaled around €40 billion. Now the country wants the European Union to undertake the same assessment as a first step to phasing out support for dirty fuels. Activists say that figure dwarfs support for renewables.

Other countries who signed up for the coalition include France, Canada, Spain and Austria. The group wants to involve international organizations like the International Monetary Fund and the World Trade Organization, as well as create a common methodology to measure support for polluting fuels.

We need to be “removing harmful fossil fuel subsidies that we know are making it less pressing for us to move to a greener future,” Kristalina Georgieva, managing director of the IMF, said at a panel at COP28. The fund estimates that global fossil fuels subsidies will rise to $1.3 trillion this year as government seek to mitigate the impact of rising prices.

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