This side event focused on fossil fuel subsidy reform as a means to deliver the Sustainable Development Goals (SDGs), including through opportunities for financing and sustainable energy access. Panelists shared strategies, including better targeting of subsidies and shifts towards renewable energy and energy efficiency. IISD-Global Subsidies Initiative (GSI) launched a report on interlinkages between energy access and fossil fuel subsidies, “Getting on Target: Accelerating Energy Access through Fossil Fuel Subsidy Reform”.

Moderator, Scott Vaughan, President and CEO, IISD, opened the side event, highlighting: opportunities of reform and possible benefits in support of energy access; and citing work by New Zealand as an example of leadership on the issue.

Craig Hawke, Permanent Representative of New Zealand to the UN, said his country has long held the view that fossil fuel subsidy reform is the building block to reaching the SDGs and 2030 Agenda. He noted that subsidies divert funds that might be used on other SDG priorities and are often contrary to other policy goals. Hawke said world leaders are committed to reform, noting support in a number of international fora, and stressed continuing to voice the case for reform.

Annika Lindblom, Secretary General, National Commission on Sustainable Development (NCSD), and Counsellor, Ministry of the Environment, Finland, stressed the urgency of shifting from a fossil fuel-based economy to a circular economy, noting that fossil fuel subsidy reform is a cross-cutting issue and tool to synergize actions on the Paris Agreement and SDGs. Lindblom outlined Finland’s efforts to: integrate subsidy reform into its Nationally Determined Contribution to the Paris Agreement; efficiently manage public resources through energy taxation, such as carbon pricing; conduct an assessment on environmentally and socially harmful subsidies; and reflect the SDGs and assessment results in its 2019 budget. She called for using the 2030 Agenda to bring on board relevant stakeholders, especially finance and energy ministries.

Anna Zinecker, Policy Advisor, IISD, presented results from the IISD-GSI report, including: financial implications of fossil fuel subsidies; potential impacts of reform; and strategies to remove subsidies to increase energy access. She highlighted:

• subsidies act on price, but providing more income through economic development will remove the need for a subsidy;
• production subsidies are substantial, hidden, and difficult to find;
• consumption subsidies don’t help people who don’t have energy access, mostly the poorest;
• subsidies can have unintended market impacts;
• global subsidies are 7.5 times larger than the amount required for universal access to electricity and clean cooking (US$ 425 billion vs. US$56 billion); and
• subsidies have a large opportunity cost in countries with low access rates and limited government funds, averaging US$ 573 for every house that had no access to electricity.

She described potential reform strategies, including: removing subsidies that don’t support energy access for poor people; better targeting of subsidies for those who need them; and swapping or shifting subsidies to investments in renewable energy and energy efficiency.

Charles Arden-Clarke, Head, 10-Year Framework of Programmes (10YFP), UN Environment, said removing fossil fuel subsidies could lower CO2 emissions by more than 20%, helping to reduce pollution and improve health. He outlined cases that mobilized public revenues from fossil fuel subsidy reform, including: reinvestment by Indonesia, of US$ 15 billion in savings, in infrastructure and poverty reduction programmes; and Morocco’s increased annual US$ 3 billion spending on health and education sectors and renewable energy. Noting energy efficiency efforts remain incremental and fragmented, he stressed: encouraging fossil fuel subsidy reforms through: transparent data and public information campaigns; capacity building for policymakers; and complementary policies in support of vulnerable groups to offset negative impacts of energy prices and potential job losses.

In ensuing discussion, topics included: using the 2030 Agenda process for engaging non-environmental sectors, especially energy, finance, and health ministries; addressing fossil fuel subsidy reform during HLPF 2019, linking to SDG 13 (climate action); evidence-based advocacy to make impacts in government policies; measures to maximize winners and minimize losers; sharing best practices; progress on reducing subsidies from US$ 800 billion several decades ago to US$ 425 billion today; India’s “Give it Up” campaign encouraging more affluent households to relinquish liquefied petroleum gas (LPG) subsidies; and how to identify and address stranded assets, that may occur after subsidy reform..

During closing remarks, Vaughn noted that reform efforts will generate opposition from those who benefit from existing fossil fuel subsidies, and lauded work by the countries and organizations participating in the event.

This side event focused on the role of decentralized, renewable energy as a key solution for achieving Sustainable Development Goal (SDG) 7 (affordable and clean energy), including through: public and private financing; working in multi-stakeholder coalitions; and inclusive policies and strategies, including gender mainstreaming.

Noting the relevance of holding an event focused on providing energy for all on the 100th anniversary of Nelson Mandela’s birth, Moderator Eco Matser, Hivos, highlighted decentralized renewable energy as the fastest way to ensure access for the one billion people who lack it.

Puspa Raj Kadel, Vice-Chairman, National Planning Commission (NPC), Nepal, said energy sector transformation should take advantage of: new technologies; investments and policy support; rapid declines in cost of renewable energy; new business models; and sharing of best practices. He noted that clean energy contributes only 8% to Nepal’s energy mix, and described NPC’s work on distributed generation, that: encourages all 753 municipalities to help establish renewable energy systems, using cost-sharing with the government; and feeds excess power into the national grid. He also highlighted efforts to scale up solar; government viability gap funding; and attracting international partners for implementing renewable energy projects.

Indra Zaandam, Ministry of Regional Planning, Infrastructure and Environment, speaking on behalf of the Vice Prime Minister of Aruba, Netherlands, noted her country’s efforts to ensure, by 2023, that 16% of all energy used in the Netherlands is sustainable, contributing to SDG 7. She stressed ensuring “accessible information” on renewable energy for raising awareness and changing the choices by both the private sector and consumers, saying “if it’s not about people, it’s not going to happen.”

Paul Mbuthi, Renewable Energy Ministry of Energy, Kenya, outlined challenges on decentralized renewable energy solutions, including: ensuring that decentralized off-grid systems in local communities include cooking equipment; scaling up existing solutions; and creating an enabling environment, including policies and finance that target households without access to energy. He said if we do not “reengineer our policy,” we will not achieve universal access.

Edwin Huizing, Executive Director, Hivos, stressed the need to address predictabilities of renewables so governments can plan more in long-term, saying we are lagging behind the targets of SDG 7. He emphasized: making decentralized renewable energy solutions affordable and accessible; mobilizing funding, including through blended finance; focusing on small-scale projects to ensure tailor-made solutions; and scaling up these practices.

Christine Eibs Singer, Sustainable Energy for All (SEforAll) and SELCO, underscored: translating messages so all stakeholders can share their level of expertise; developing market potential through national policy on renewable energy and increased consumer awareness; private-public partnerships that recognize the public sector’s enabling role in energy delivery; and the issue of risk related to electrification and appropriate public sector intervention, noting that to fully deliver energy access by 2030 will require $33 billion dollars in investment, including $1 billion in grants.

Divyam Nagpal, International Renewable Energy Agency (IRENA), said the latest IRENA report revealed 133 million people have access to some forms of renewables, but noted slow progress worldwide. He emphasized that scaling up existing off-grid solutions and linking them to energy service delivery at large would generate substantial socio-economic benefits, contributing to multiple SDGs. Nagpal also outlined challenges, including: critically analyzing the progress and learned lessons; and leveraging local systems of adopting renewable technologies.

Ram Prasad Dhital, Alternative Energy Promotion Centre (AEPC), Nepal, outlined: his country’s approach to providing energy access, highlighting: financing, including from IRENA, and its critical role for remote and rural areas; decentralization to address lack of incentives to invest in low-income and remote areas; and engineering solutions. He described components of Nepal’s strategy to overcome challenges, including: a rural energy development program using hydropower to develop social capital; and mainstreaming and upscaling renewable energy projects in all municipalities. For reaching the “last mile,” he emphasized: government programs to create a conducive environment for private sector engagement; and development of micro-utilities for long-term sustainability.

Discussion topics included: continued reliance on fossil fuel revenues; impacts of decentralization on financial viability of the grid in small island developing states; utility pricing disincentives for renewables; engaging those left behind; prioritizing economic activity at different enterprise scales, including through capacity building; and recognizing that energy use varies not only by income level, but also by sector.

In closing comments, Huizing highlighted: changing behaviors and inclusive discussions; bringing everyone together to achieve the last mile; and influencing a shift in investment away from fossil fuels.