O’Connor chuffed about NZ’s leadership on banishing fossil fuel subsidies – but the big test will be bringing the US on board

Monitoring the Ministers

The PM has been dishing out bravery awards and releasing the Government’s 2021 National Security Intelligence Priorities while Health Minister Andrew Little has been dishing out $644 million for hospital upgrades.  Or rather, he has confirmed the government will fund 36 different local hospital upgrades throughout the country and the operational costs to support them, at a total cost of $644 million  

In  one of her statements, Prime Minister Jacinda Ardern acknowledged the extraordinary courage of ten people recognised for acts of bravery relating to the March 15, 2019 terrorist attacks.

In the other, she said the National Security Intelligence Priorities help us to identify threats, risks, and challenges to New Zealand’s security and wellbeing, while outlining current areas of interest where intelligence can support the Government to make informed decisions.

The Priorities have been grouped into 13 overarching themes covering a range of threats and risks to New Zealand including; foreign interference and espionage, climate change and environmental issues, malicious cyber activity, terrorism and violent extremism.  

In his statement, Andrew Little announced $100 million in fast-tracked health capital projects had been confirmed, supported by $544 million operational funding

The Government will upgrade 24 local hospitals next year to support planned and routine care, to ensure non-COVID patients are safe when COVID patients are being treated.  The Programme will be rolled out alongside an international health workforce recruitment campaign.

Oh – and let’s not overlook Finance Minister Grant Robertson’s latest statement about the resilience of the economy in the face of the impact of the Delta outbreak.

This resilience – did you doubt it? – is reflected in today’s GDP figures (-3.7% in the September quarter) while reinforcing the Government’s actions to support businesses and workers to secure the recovery.  

But Point of Order is confident the mainstream media will focus on those matters.  We were drawn to a statement from Damien O’Connor and James Shaw which had us wondering if they ever get the feeling they might be tilting at windmills.

Yes, we know tilting at windmills is an expression inspired by the adventures of the fictional Don Quixote who tilted at imaginary enemies.   O’Connor and Shaw are gunning for oil subsidies, which are all too real.

To be successful our doughty Ministers must persuade a few economic heavyweights (such as the United States) to reduce – if not remove – their subsidies.

Good luck with that.

We are reminded by this WJCT News item that President Joe Biden promised to take action on the climate change front and said:

And I’d stop giving to the oil industry. I’d stop giving them federal subsidies.

Turning that promise into reality is proving difficult. The WJCT News post explains why.

But Biden has allies Down Under, where Trade and Export Growth Minister Damien O’Connor declared: 

New Zealand is continuing its leadership in tackling damaging fossil fuel subsidies through a launch of Joint Ministerial Statement, supported by 45 WTO Members…  

And:

The successful delivery of this Statement is another example of New Zealand’s leadership in addressing environmentally harmful subsidies, including through its hosting of APEC 2021.

An AFP report did not mention New Zealand’s leadership.

Rather, it said dozens of countries had pledged to intensify efforts to get rid of fossil fuel subsidies and tackle plastics pollution in an effort spearheaded by the World Trade Organisation

It also noted the absence of the big polluters from the signatories.

The European Union and Britain, but none of the other principal global polluters, were among 45 signatories to a WTO ministerial statement  pledging to “seek the rationalisation and phase out of inefficient fossil fuel subsidies.

China, Russia and the EU — but not the United States — were among 67 signatories pledging to reduce the usage of harmful plastics by ramping up efforts around recycling and development of alternative materials.

A third statement backed by 71 countries including the US and China agreed to intensify work to “expand opportunities for environmentally sustainable trade in an inclusive and transparent way”.

But let’s hear from Damien O’Connor.

He spoke of the environmental, economic, and social costs of fossil fuel subsidies.

“Worryingly, fossil fuel subsidies have continued to increase in the past decade, costing governments approximately US$500 billion of public funds per annum. These subsidies work against our efforts to address climate change by artificially lowering the cost of fossil fuels, and encouraging their on-going use.  This is the opposite of what we should be doing,” Damien O’Connor said. 

His statement says he launched the Joint Ministerial Statement on Fossil Fuel Subsidy Reform with EU Trade Commissioner Dombrovskis, at a virtual event held overnight. The event was attended by World Trade Organisation Director-General Ngozi Okonjo-Iweala, along with key international trade and environment organisations.

The Statement was originally due to be launched at the WTO’s Twelfth Ministerial Conference, which was postponed due to the outbreak of the Omicron variant of COVID-19.

Climate Change Minister James Shaw welcomed the Statement, noting that the recent Glasgow Climate Pact, for the first time, explicitly recognised the need to phase out fossil fuels.

“Many people, including me, would have liked the COP26 agreement to go further on fossil fuels. But the very fact they were mentioned at all is a significant milestone. It is especially encouraging to now see Aotearoa New Zealand leading by example with this commitment to tackle the out-dated fossil fuel subsidies holding back our efforts to keep the 1.5 degree goal alive,” said James Shaw.

New Zealand co-sponsored two additional joint Ministerial statements on trade and the environment at the event overnight. 

These statements signal NZ’s continued support for the WTO’s structured discussions on trade, environment and sustainable development, as well as on plastics pollution and sustainable plastics trade.

“We fundamentally believe that the rules-based system of the WTO is a force for positive change,” Damien O’Connor said.

The Joint Ministerial Statement on Fossil Fuel Subsidy Reform can be found here.

The Joint Ministerial Statement on Trade and Environmental Sustainability Structured Discussions (TESSD) can be read here.

The Joint Ministerial Statement on Informal Dialogue on Plastic Pollution and Environmentally Sustainable Plastics Trade (IDP) can be read here.

Point of Order found more about the US$500 billion on the Ministry of Foreign Affairs and Trade website.  

Removing these subsidies would substantially contribute to The Paris Agreement objective of holding the increase in global temperatures to below 2°C degrees above pre-industrial levels and would contribute towards pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels, it said.

Recent estimates  suggests that fossil fuel subsidy reform would lead to significant reductions in emissions and fiscal savings for governments.

The International Energy Agency estimates that consumer subsidies alone amounted to more than US$426 billion in 2018. This rises to approximately US$500 billion when you add the amount governments spend subsidising fossil fuel production.

By contrast, official development assistance by Organisation for Economic Cooperation and Development (OECD) countries totalled US$153 billion in 2018. That’s less than a quarter of what the world spent subsidising fossil fuels in the same period.

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6 thoughts on “O’Connor chuffed about NZ’s leadership on banishing fossil fuel subsidies – but the big test will be bringing the US on board

  1. Most of the “subsidies” aren’t. They are things like changes in depreciation rules or lower tax rates. They are not grants from the government like wind and solar get. The government just takes a bit less of the oil producers’ income.

    Liked by 1 person

  2. So Labour wants to make it harder for working people and the poor to keep warm in bitter northern hemisphere winters, where there is no alternative to fuel oil? Amazingly trite little ideologues.

    Like

  3. Could we please have a list of specific subsidies?

    I can name plenty of fuel taxes, plenty of costs associated with fossil fuel exploration, but no subsidies come to mind.

    Like

  4. The Peer Review on NZ’s fossil-fuel subsidy position (link in your article) states:
    “In its findings, the panel didn’t identify any inefficient fossil fuel subsidies that lead to wasteful consumption in New Zealand.”
    This is conveniently ignored by politicians, journalists and activists alike.

    Like

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