Three environmental think tanks recently evaluated India for its progress on a pledge it made to trim government spending on fossil fuels. Their report found India’s progress poor on most fronts; public money toward encouraging fossil fuel use in the country had increased, moving in the opposite direction than previously promised.
The report evaluated G20 countries, made up of 19 nations, including India, and the European Union, and assigned a letter-grade rating to the progress they had made on their commitments to phase out fossil fuel use. It found that through direct transfers, tax subsidies, and investment into fossil fuels by state-owned enterprises (SOEs), G20 countries spent an average total of US$584 billion per year on fossil fuels between 2017 and 2019. The most common form of fossil fuel support was an increased investment in oil and gas production, the report found, amounting to 47% of total government expenditure in G20 countries.
“This support places a burden on public budgets, using resources that could otherwise be put to more efficient and sustainable uses within the economy, such as toward health, social support, and the clean energy transition,” the report stated. Government funding can also kickstart projects that otherwise would not have started, and decrease competitiveness of other sectors in the market, such as those that advocate for low carbon use.
In developing economies, such as India, state-owned enterprises have a big role to play in phasing out fossil fuel use, as they dominate in sectors of energy production and consumption. For example, SOEs at the state level are responsible for 29% of electricity generation and those at the center, 45% — which also puts the onus on the government to curb environmentally destructive fossil fuel use and expenditure.
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The report gives India a C+ grade at phasing out fossil fuels from government budgets, meaning the Indian government is “poor” at transparency about its support for fossil fuels; “weak” at following through on pledges and commitments; “high” in its support of coal production, oil and gas production, and encouragement of fossil fuel-based power; and “poor” in making progress to end fossil fuel expenditure.
In order to make progress on prior commitments, the report urges G20 countries to end public expenditure on fossil fuels, raise taxes on corporations that produce and use fossil fuels, remove energy subsidies on fossil fuel use so the money can be diverted to social programs that benefit the poor, and conduct peer reviews that ensure governments are being transparent about their public expenditure and held accountable for the progress (or lack thereof) they make.
Furthermore, “The Covid-19 crisis and governments’ responses to it are intensifying the trends that existed before the pandemic struck,” Ivetta Gerasimchuk, a sustainable energy expert from one of the think tanks that authored the current report, and a project lead on Energypolicytracker.org, a database of progress on G20 energy pledges, told Livemint in July. “National and subnational jurisdictions that heavily subsidized the production and consumption of fossil fuels in previous years have once again thrown lifelines to oil, gas, coal, and fossil fuel-powered electricity.”
