G20 agrees on phase-out of fossil fuel subsidies

The world's largest economies agreed on Friday to phase out subsidies for oil and other carbon dioxide-spewing fossil fuels in the "medium term" as part of efforts to combat global warming.

But Group of 20 leaders at a two-day summit meeting here did not advance discussions about financial aid for developing nations dealing with climate change, exacerbating concerns that U.N. talks to form a new climate pact are in peril.

Some $300 billion a year is spent worldwide to subsidize fuel prices, boosting demand in many nations by keeping prices artificially low and, thus, leading to more emissions.

The agreement -- backed by all of the G20 including Russia, India and China -- was a victory for U.S. President Barack Obama, whose credentials for fighting climate change have been marred by dimming prospects that the U.S. Senate will pass a bill to reduce emissions before the December U.N. meeting.

"This reform will increase our energy security ... and it will help us combat the threat posed by climate change," Obama told reporters at the close of the meeting.

"All nations have a responsibility to meet this challenge, and together we have taken a substantial step forward in meeting that responsibility," he said.

Eliminating such subsidies by 2020 would reduce greenhouse gas emissions blamed for global warming by 10 percent by 2050, leaders said, citing data from the International Energy Agency and the Organization for Economic Cooperation and Development.

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Source: Reuters