Gigatonne gap and fossil fuel subsidies

Legal assistance paper

All reasonable efforts have been made to ensure the accuracy of this information at the time the advice was produced. However, the materials have been prepared for informational purposes only and may have been superseded by more recent developments. They do not constitute formal legal advice or create a lawyer- client relationship. To the extent permitted any liability is excluded. Those consulting the database may wish to contact LRI for clarifications and an updated analysis.

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Date produced: 09/06/2010

1. There is an ongoing process established by the G20 to determine the amounts of fossil fuels subsidies. Is it possible to have a place in COP discussions to consider this process in order to ensure its full transparency, and ensure its relevancy is captured in the climate regime? Would this mandate come from the G20 or from the COP?

2. The phase out of fossil fuel subsidies seems to be mostly a domestic matter, but can it be made part of a legal framework that is multilateral? Can such a framework be used to guide countries reinvestment of those funds into green investments (such as jobs, technology, renewable energies etc)?

3. For example, is there appropriate language you could suggest for a COP decision that would ensure consideration of this issue under one of the formal subsidiary bodies of the Convention or a new working group to consider new approaches (such as those listed in the General Background section below) to close the ‘Gigatonne Gap’?

1. It is open for any Party to put forward matters for discussion within the context of the UNFCCC. If other Parties agree to consider that matter, then it will form part of the agenda of the COP. However, consideration in the UNFCCC fora requires a mandate from the COP. The G20 does not have legal authority to direct the COP to consider matters.

2. Subsidies are a matter of consideration in the multi-lateral framework for international trade administered by the World Trade Organisation  (see the General Agreement on Tariffs and Trade – GATT). The principles established in the GATT seek to reduce trade barriers and prohibit discrimination between like products traded by different WTO members or between domestically and internationally trade goods. One means of trade liberalisation and removing discriminatory practices is to remove subsidies.

Whilst there are exemptions in the GATT to facilitate domestic measures that achieve environmental outcomes (Art.XX) there is nevertheless the risk that those types of policies and measures (e.g. enabling the promotion of renewable technologies in one country), may infringe the more general provisions associated with non-discrimination if applied in a way that promotes one country’s interests over that of others.

The GATT (and more generally international law unless there is an express agreement in place) does not, and cannot, direct countries to act in a particular way in respect of spending national revenues.

3. Language to the following effect could be proposed, but this is contingent on an agenda item being approved of and parties agreeing to further consideration of the issue:

“Recognising that subsidies for fossil fuels operate as a barrier to effective mitigation action by all Parties;

Requests Parties and International Observer Organisations to submit views on the treatment of fossil fuels subsidies, including, inter alia, the identification of existing fossil fuel subsidies and measures being undertaken to limit, reduce or remove those subsidies.

Request SBSTA at its [#th] meeting, to further consider means to address the effect of subsidies on effective mitigation action.”