Fossil fuel subsidies better spent on renewables, Trade Minister David Parker tells WTO conference

Trade Minister David Parker has told a World Trade Organisation meeting that hundreds of billions of dollars in fossil fuel subsidies should be redirected into renewable energy.

His comments, made today at the WTO ministerial conference in Buenos Aires, Argentina, echo previous statements made by Prime Minister Jacinda Ardern at the Asia Pacific Economic Co-operation summit in Vietnam last month.

"Each year, Governments are spending at least US$425 billion subsidising the production and sale of coal, oil, gas and other greenhouse gas emitting fuels," Parker told a WTO event on fossil fuel subsidy reform.

"We want to change this. This money could be better used to pursue other development goals or invest in the renewable energy sector."

Parker, who co-hosted the event with Finland, delivered a ministerial statement endorsed by 12 other WTO members to confirm the benefits of subsidy reform.

"Phasing out fossil fuel subsidies will offer huge opportunities for promotion of sustainable development, renewable energy, removal of trade distortions and the reduction of global warming," Parker said.

"A partial phase-out of subsidies would contribute to climate change mitigation efforts and the Paris Agreement. Removing fossil fuel subsidies for consumption alone could lead to the reduction of global emissions by between 6 to 8 per cent by 2050."

Ardern made similar statements in her address to chief executives at the Apec summit in Vietnam last month.

"Every year governments spend US$500 billion to subsidise fossil fuels, four times the amount we spend on renewable energy. By keeping prices artificially low, fossil fuel subsidies encourage wasteful consumption, disadvantage renewable energy and depress investment in renewable energy," she told the summit.

"We must phase them out. It is incumbent on us to begin incentivising investment in the right technologies."

The ministerial statement, signed by New Zealand, Chile, Costa Rica, Iceland, Liechtenstein, Mexico, Moldova, Norway, Samoa, Switzerland, The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, and Uruguay - says that fossil fuel subsidies "amounted to 20 per cent of the value of internationally traded fuels".

"A phase-out of fossil-fuel subsidies would generate an estimated 12 per cent of the total abatement needed by 2020 from energy sector emissions," the statement said.

"We seek the rationalisation and phase out of inefficient fossil fuel subsidies that encourage wasteful consumption, and encourage the international community to join us in those efforts."