-
The economists believe that G7 countries should end oil and gas financing as they end coal financing in 2021.
- The Covid-19 recovery response provides an opportunity for governments to invest in clean energy.
- Green recovery packages would deliver far more benefits compared to traditional fiscal stimulus.
A group of 102 economists from reputable institutions worldwide have called on G7 leaders to phase out financing for oil and gas in 2021. G7 leaders are set to meet from June 11 – 13 to adopt an agenda to “build back better from coronavirus and create a greener, more prosperous future”.
The group believe that a global shift of finance from fossil fuels into clean alternatives worldwide is needed to limit global warming to 1.5°C this century. A recent UN research indicates that oil and gas production needs to decline by about 4% and 3% respectively every year between 2020 and 2030 to meet this target. The group states that further investments in oil and gas would undermine the achievement of the Paris Agreement’s goals.
With continued investments in fossil fuel infrastructure, there is an increased risk of stranded assets, unfunded clean-up, job cuts, and shortfalls in government revenue, given that cleaner alternatives are increasingly growing and becoming cheaper. A report last year indicates that green recovery packages would create more jobs, deliver higher short-term returns per dollar spent and lead to increased long-term cost savings when compared to traditional fiscal stimulus.
The group notes that between 2017 and 2019, the G7 provided $86 billion in public finance for fossil fuels, over 200 per cent of the figure invested in clean energy. The group urges G7 members to apply the 2021 coal financing deadline to oil and gas projects. G7 members need to take advantage of the huge investment opportunities in clean energy as they look to inject public finance into the economy in response to Covid-19, they added.