The governments of the world’s major industrialized countries, the G20 group, are providing more than US$450 billion a year to support the production of fossil fuels.
That is almost four times the entire world’s subsidies to the rapidly growing renewable energy sector, as the International Energy Agency (IEA) estimates total global renewables subsidies in 2013 at $121bn.
The G20 group agreed in 2009 to phase out fossil fuel subsidies “in the medium term,” a pledge that was repeated at its 2014 meeting in Brisbane.
But the UK’s Overseas Development Institute (ODI) and campaign group Oil Change International (OCI) have now published a detailed analysis of G20 subsidies to oil, gas and coal production.
Empty Promises
Their “Empty Promises” report on G20 subsidies to oil, gas and coal production says researchers found that G20 support to fossil fuel production now totals $452bn.
The report singles out the UK for particular criticism, saying it “stands out as the only G7 nation significantly ramping up its support for the fossil fuel industry, with even more tax breaks and industry support handed out to companies operating in the North Sea in 2015.”
A similar report by the two groups a year ago said G20 subsidies for fossil fuel exploration alone amounted to an estimated $88bn annually.
The G20’s continued support for fuels—whose use increases greenhouse gas emissions and increases the risk of irreversible and catastrophic climate change—ignores the global imperatives to keep most current fossil fuel reserves in the ground.
It also disregards the faltering economic returns from coal and from oil and gas reserves, which are increasingly difficult to exploit.
The Intergovernmental Panel on Climate Change says at least three-quarters of proven reserves of oil, gas and coal must stay in the ground in order for the planet to have a two-in-three chance of remaining below the internationally-agreed 2C climate change threshold.
There is continuing scientific debate over how much of the world’s fossil fuels should remain unexploited, with many estimates ranging from a fifth to a third. The UN climate change conference in Paris, starting on Nov. 30, is likely to see a keen debate on the issue.
The ODI/OCI report, published before the G20 summit in the Turkish city of Antalya, examines three types of G20 government support in 2013 and 2014—the most recent years with comparable data.
It looks at national subsidies extended through direct spending and tax breaks; investment by state-owned enterprises, both domestically and internationally; and public finance extended through, for example, loans from government-owned banks and financial institutions.
Tax Breaks
Japan provided more public finance for fossil fuel production in 2013 and 2014 than any other G20 country, averaging $19bn per year—$2.8bn of that for coal alone. The U.S. provided more than $20bn in national subsidies, despite calls from President Obama to scrap support to fossil fuels.
Russia provided almost $23bn in national subsidies—the highest of all the G20 countries—and China’s investment in fossil fuel production at home and abroad amounted to almost $77bn annually.
Turkey, this year’s G20 host, is giving tax breaks to support its program of building more coal plants than any other OECD country, potentially raising its own greenhouse gas emissions by 94 percent over the next 15 years.
At the end of September, the U.S. and China agreed to give priority to the establishment of a firm deadline for the phase-out of fossil fuel subsidies as a key task during China’s G20 presidency in 2016.
The report recommends G20 governments adopt strict timelines for the phase-out of fossil fuel production subsidies, increase transparency through improved reporting of the subsidies and transfer government support to wider public goods, including low-carbon development and universal energy access.
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Though made in large part of plastic, glass, ceramics, gold and copper, they also contain critical resources. The gallium used for LEDs and the camera flash, the tantalum in capacitors and indium that powers the display were all pulled from the ground — at a price for nature and people.
"Mining raw materials is always problematic, both with regard to human rights and ecology," said Melanie Müller, raw materials expert of the German think tank SWP. "Their production process is pretty toxic."
The gallium and indium in many phones comes from China or South Korea, the tantalum from the Democratic Republic of Congo or Rwanda. All in, such materials comprise less than ten grams of a phone's weight. But these grams finance an international mining industry that causes radioactive earth dumps, poisoned groundwater and Indigenous population displacement.
Environmental Damage: 'Nature Has Been Overexploited'
The problem is that modern technologies don't work without what are known as critical raw materials. Collectively, solar panels, drones, 3D printers and smartphone contain as many as 30 of these different elements sourced from around the globe. A prime example is lithium from Chile, which is essential in the manufacture of batteries for electric vehicles.
"No one, not even within the industry, would deny that mining lithium causes enormous environmental damage," Müller explained, in reference to the artificial lakes companies create when flushing the metal out of underground brine reservoirs. "The process uses vast amounts of water, so you end up with these huge flooded areas where the lithium settles."
This means of extraction results in the destruction and contamination of the natural water system. Unique plants and animals lose access to groundwater and watering holes. There have also been reports of freshwater becoming salinated due to extensive acidic waste water during lithium mining.
But lithium is not the only raw material that causes damage. Securing just one ton of rare earth elements produces 2,000 tons of toxic waste, and has devastated large regions of China, said Günther Hilpert, head of the Asia Research Division of the German think tank SWP.
He says companies there have adopted a process of spraying acid over the mining areas in order to separate the rare earths from other ores, and that mined areas are often abandoned after excavation.
"They are no longer viable for agricultural use," Hilpert said. "Nature has been overexploited."
China is not the only country with low environmental mining standards and poor resource governance. In Madagascar, for example, a thriving illegal gem and metal mining sector has been linked to rainforest depletion and destruction of natural lemur habitats.
States like Madagascar, Rwanda and the DRC score poorly on the Environmental Performance Index that ranks 180 countries for their effort on factors including conservation, air quality, waste management and emissions. Environmentalists are therefore particularly concerned that these countries are mining highly toxic materials like beryllium, tantalum and cobalt.
But it is not only nature that suffers from the extraction of high-demand critical raw materials.
"It is a dirty, toxic, partly radioactive industry," Hilpert said. "China, for example, has never really cared about human rights when it comes to achieving production targets."
Dirty, Toxic, Radioactive: Working in the Mining Sector
One of the most extreme examples is Baotou, a Chinese city in Inner Mongolia, where rare earth mining poisoned surrounding farms and nearby villages, causing thousands of people to leave the area.
In 2012, The Guardian described a toxic lake created in conjunction with rare earth mining as "a murky expanse of water, in which no fish or algae can survive. The shore is coated with a black crust, so thick you can walk on it. Into this huge, 10 sq km tailings pond nearby factories discharge water loaded with chemicals used to process the 17 most sought after minerals in the world."
Local residents reported health issues including aching legs, diabetes, osteoporosis and chest problems, The Guardian wrote.
South Africa has also been held up for turning a blind eye to the health impacts of mining.
"The platinum sector in South Africa has been criticized for performing very poorly on human rights — even within the raw materials sector," Müller said.
In 2012, security forces killed 34 miners who had been protesting poor working conditions and low wages at a mine owned by the British company Lonmin. What became known as the "Marikana massacre" triggered several spontaneous strikes across the country's mining sector.
Müller says miners can still face exposure to acid drainage — a frequent byproduct of platinum mining — that can cause chemical burns and severe lung damage. Though this can be prevented by a careful waste system.
Some progress was made in 2016 when the South African government announced plans to make mining companies pay $800 million (€679 million) for recycling acid mine water. But they didn't all comply. In 2020, activists sued Australian-owned mining company Mintails and the government to cover the cost of environmental cleanup.
Another massive issue around mining is water consumption. Since the extraction of critical raw materials is very water intensive, drought prone countries such as South Africa, have witnessed an increase in conflicts over supply.
For years, industry, government and the South African public debated – without a clear agreement – whether companies should get privileged access to water and how much the population may suffer from shortages.
Mining in Brazil: Replacing Nature, People, Land Rights
Beyond the direct health and environmental impact of mining toxic substances, quarrying critical raw materials destroys livelihoods, as developments in Brazil demonstrate.
"Brazil is the major worldwide niobium producer and reserves in [the state of] Minas Gerais would last more than 200 years [at the current rate of demand]," said Juliana Siqueira-Gay, environmental engineer and Ph.D. student at the University of São Paulo.
While the overall number of niobium mining requests is stagnating, the share of claims for Indigenous land has skyrocketed from 3 to 36 percent within one year. If granted, 23 percent of the Amazon forest and the homeland of 222 Indigenous groups could fall victim to deforestation in the name of mining, a study by Siqueira-Gay finds.
In early 2020, Brazilian President Jair Bolsonaro signed a bill which would allow corporations to develop areas populated by Indigenous communities in the future. The law has not yet entered into force, but "this policy could have long-lasting negative effects on Brazil's socio-biodiversity," said Siqueira-Gay.
One example are the niobium reserves in Seis Lagos, in Brazil's northeast, which could be quarried to build electrolytic capacitors for smartphones.
"They overlap the Balaio Indigenous land and it would cause major impacts in Indigenous communities by clearing forests responsible for providing food, raw materials and regulating the local climate," Siqueira-Gay explained.
She says scientific good practice guidelines offer a blueprint for sustainable mining that adheres to human rights and protects forests. Quarries in South America — and especially Brazil — funded by multilaterial banks like the International Finance Corporation of the World Bank Group have to follow these guidelines, Siqueira-Gay said.
They force companies to develop sustainable water supply, minimize acid exposure and re-vegetate mined surfaces. "First, negative impacts must be avoided, then minimized and at last compensated — not the other way around."
Reposted with permission from DW.