Climate Crisis: Here’s How Government Subsidies to Fossil Fuels and Industrial Agriculture Fuel It

ROMA –– Since 2016, the year in which theParis Agreement, As of 2023, the fossil fuel sector in the Global South received an average of $438.6 billion per year in government subsidies. Meanwhile, between 2016 and 2021 (the latest year for which data are available), industrial agriculture received subsidies worth an average of $238 billion per year.

The ActionAid report. This is what emerges from the report of ActionAid, How the Finance Flows: Corporate capture of public finance fuelling the climate crisis in the Global South. Together, the two biggest polluters continue to receive massive government subsidies — $677 billion a year — draining resources that could, for example, fund more than three and a half times the cost of education for all children in sub-Saharan Africa. Major beneficiaries of these funds include multinationals such as Shell and agribusiness giant Bayer.

The Global South Trapped in Destructive Patterns. While countries in the Global North fail to secure adequate financing to support the climate transition, those in the Global South remain trapped in destructive development models that result in land dispossession, ecosystem devastation and exacerbate climate inequalities. Funds to combat the climate crisis represent less than 1/20 of the public finances allocated to the agricultural and fossil fuel industries in the Global South.

Agreements are signed, but funding continues. Despite commitments to eliminate fossil fuel subsidies, signatory countries to theParis Agreement they continue to finance and subsidize its extraction; in the European Union alone, for example, the Member States have allocated, overall, an average of 55-58 billion euros per year.

Public money in spades where production is polluting. The fossil fuel sector across the Global South receives 40 times more public funding than renewables. Renewables funding has fallen by more than 50%, from $15 billion in 2016 to $7 billion in 2021, averaging just $10.3 billion per year. These figures paint an alarming picture of the current state of global financial flows and how corporate capture, or drastic spending influence, of public finances is actively undermining the needs of vulnerable countries, along with international climate commitments.

And the “sick” subsidies also concern Italy. “The problem of subsidies concerns us directly – says Cristiano Maugeri, responsible for policies in theclimate area Of ActionAid Italy – Our country is sixth among the G20 countries for public subsidies to fossil fuels. Recently, a radical change has been made to the Italian Climate Fundthe ambitious proposal launched by the previous government to COP26 of Glasgow, transferring much of the resources under the Mattei Plan, an initiative which, on the contrary, lacks any climate aspiration.

The absence of a dedicated climate policy. It is therefore clear that the commitment to end all forms of direct public support for fossil fuels has not been respected. The absence of a climate policy, combined with recent political decisions, such as the aforementioned Mattei Plan, marks a dangerous departure from the internationally agreed objectives, demonstrating that we are proceeding in a direction opposite to that promised”

TESTIMONIALS FROM THE NIGER DELTA

From the Erhobaro community. The community of Erhobaro, in the Niger Delta, is home to 27 oil wells, from which Shell extracts and sells its oil.And oil well is right on my mother’s land“, tells Finegirl, a 27-year-old farmer. “When Shell arrived, they promised the landowners that they would be financially supported for life, but 15 years later, my mother has not received a single cent.” Instead of compensation, the community has only suffered damage: frequent oil spills have polluted the water, making the lands unproductive and daily life unsustainable. “The incessant noise and vibrations of the well prevent us from even sleeping,” concludes Finegirl.

From the village of Oforigbalan. 40 km away, in the village of Oforigbalan, fisherwoman Helen describes how fishing, once plentiful, is now almost non-existent due to pollution. “I put my nets in this morning, but I haven’t caught a single fish yet. In the past, I used to catch a lot of big fish. There were a lot of fishermen and women in the community and fishing was a thriving business.”

From the location of One Jonah Gbembre, an activist from Iriwekan, works in this area where Shell’s fossil fuel extraction has had devastating impacts. He says: “Communities in the Niger Delta have seen first-hand the irreparable damage caused by oil drilling. The rivers that supported our lives are polluted. People struggle to find drinking water and water to irrigate their fields, and fishing is no longer possible because all the fish have died. Gas emissions have caused health problems for our children. We have lost our way of life,” the activist says, “and there is no end in sight to our suffering. We cannot continue to live like this. Our taxes should not support oil companies like Shell, who exploit our resources and destroy our communities and our way of life. The government should invest in alternative energy, such as solar and wind, that do not harm our communities.”

ActionAid’s requests. With the international campaign #FundOurFuture, ActionAid calls for a rethinking of public financial policies, orienting them towards a just and inclusive transition that ensures climate solutions that respect human rights. It is crucial to introduce regulation in the banking and financial sectors to stop financing flows to harmful activities, imposing minimum standards on human rights, environmental sustainability and social inclusion.

The role of international financial institutions. Furthermore, “an urgent reform of international financial institutions is required, whose current functioning contributes to aggravating the debt of the countries most vulnerable to climate change”, reads the note released by ActionAid – high-income countries must commit to providing concrete subsidies to countries in the global South, which are most affected by the climate crisis. At the next COP29 – the document concludes – it will be essential to define an ambitious and realistic objective, capable of responding effectively to the global climate emergency”.