By Karl Mathiesen
Climate change is the â€œmother of all risksâ€ says Aviva CEO, and hundreds of billions in annual government assistance to oil, gas and coal is â€œsimply unsustainable.â€
Three of the worldâ€™s biggestÂ insurers called on G20Â leaders to implement a timeframe for the end of fossil fuel subsidies when they met in China last week.
The G20 has already committedÂ to phase out â€œinefficient fossil fuel subsidies that encourage wasteful consumptionâ€ over the â€œmedium term.” In May, the G7 nations pledgedÂ to achieveÂ thisÂ byÂ 2025.
When the leaders of the 20 largest economies on earth met in Hangzhou on Thursday and Friday, they needed to go further, said a joint statement fromÂ multinational insurers Aviva, Aegon and Amlin, andÂ commit to an end to assistance for fossil fuel companies within four years.
These three companiesÂ manage $1.2tn in assets. Aviva CEO Mark Wilson said:Â â€œClimate change in particular represents the mother of all risks â€“ 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.â€
Estimates of fossil fuel subsidies vary widely depending on the definition of a subsidy. The OECD reports that its member states contribute $160-200bn each year to the production of coal, oil and gas. But the International Monetary Fund (IMF) has said this neglects to account for the damage to the environment and human health for which governments carry the cost. The IMF estimates this to amount to a staggering $5.3tn a year, or $10m per minute.
â€œWeâ€™re calling on governments to kick away these carbon crutches, reveal the true impact to society of fossil fuels and take into account the price we will pay in the future for relying on them,â€ said Wilson.
Shelagh Whitley, research fellow at the Overseas Development Institute (ODI), said the current G20 pledge to end fossil fuel subsidies was â€œemptyâ€ if it lacked a concrete timeline. ODIâ€™s own estimate puts fossil fuel subsidies at $444bn each year.
â€œThese subsidies fuel dangerous climate change,â€ said Whitley. â€œIf we are to have any chance of meeting the 2C target set at the Paris climate summit then governments need to start a program of rapid decarbonization. The finance sector recognises the importance of moving away from fossil fuels, governments need to realize they may be the only ones left not moving.â€
The statement was also signed by the Institute and Faculty of Actuaries (IFoA) and Open Energi. It comes six days after 130 investors issued a similar pre-G20 representation. In the US, the Sierra Club has launched a campaign call on the Obama administration to back the same target.Î¦
Karl Mathiesen is aÂ journalist who has written for national newspapers, newswires and magazines in Australia, the US and the UK. He works as a reporter for Climate HomeÂ and is the commissioning editor for the Guardianâ€™s elephant conservation page.