G20 takes from the oil-rich to give to the poor

UPDATED: The Group of 20 Major Economies have agreed to phase out subsidies “that encourage wasteful consumption of oil” and have called upon all nations of the world to do the same. The language of the resolution itself was released this afternoon by the White House:
Enhancing our energy efficiency can play an important, positive role in promoting energy security and fighting climate change. Inefficient fossil fuel subsidies encourage wasteful consumption, distort markets, impede investment in clean energy sources and undermine efforts to deal with climate change. The Organization for Economic Cooperation and Development (OECD) and the IEA have found that eliminating fossil fuel subsidies by 2020 would reduce global greenhouse gas emissions in 2050 by ten percent. Many countries are reducing fossil fuel subsidies while preventing adverse impact on the poorest. Building on these efforts and recognizing the challenges of populations suffering from energy poverty, we commit to:
Rationalize and phase out over the medium term inefficient fossil fuel subsidies that encourage wasteful consumption. As we do that, we recognize the importance of providing those in need with essential energy services, including through the use of targeted cash transfers and other appropriate mechanisms. This reform will not apply to our support for clean energy, renewables, and technologies that dramatically reduce greenhouse gas emissions. We will have our Energy and Finance Ministers, based on their national circumstances, develop implementation strategies and timeframes, and report back to Leaders at the next Summit. We ask the international financial institutions to offer support to countries in this process. We call on all nations to adopt policies that will phase out such subsidies worldwide.
President Barack Obama promoted the initiative (and you read it here first, three days ago). The withheld revenue should take some of the sting out of the financing package that poorer nations are demanding from the developed world to help pay for clean-energy technologies and climate mitigation projects.
Developing nations have been demanding as much as $400 billion in aid to help them pay the costs of climate mitigation, and they’ve insisted that aid come from the most developed countries, which are responsible for the vast majority of greenhouse gas emissions.
Dessima Williams, chair of the Alliance of Small Island States, demanded $400 billion per year at a UN meeting in August. Last week, South African Environmental Minister Buyelwa Sonjica sought 0.5 percent to one percent of global gross domestic product for developing nations, which amounts to $200-400 billion, by 2020.
“That is the kind of commitment we need from them. The $400 billion takes into account funding for both adaptation and mitigation respectively. We need the money as in yesterday,” Sonjica told Agence France-Presse.
Total G20 oil subsidies may begin to approach that amount. The U.S. alone anticipates $12.7 billion in increased federal revenue during Obama’s first term, and an estimated $31.5 billion over the next decade, just from cutting handouts to oil companies.
Reuters reported Friday evening that the world spends $300 billion annually on fossil-fuel subsidies, but the figure may be higher. A document released by the White House quoted energy subsidies of $300 billion per year just by countries that are not members of the OECD.
The G20 draft estimates that eliminating subsidies alone will reduce greenhouse gas emissions by 10 percent by 2050. The subsidies promote fossil-fuel use by lowering the cost of fossil fuels in many nations, including China, Russia, and India.
“Inefficient fossil fuel subsidies encourage wasteful consumption, distort markets, impede investment in clean energy sources and undermine efforts to deal with climate change,” said a statement from the G20. The Group of 20, meeting today in Pittsburgh, includes Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, and the United States.