An agreement by the Group of 20 nations to phase out fossil fuel subsidies and take other measures to combat global warming left many people dissatisfied, with environmentalists saying that the plan was too weak and oil companies saying that the plan would damage the economy.
The G-20 on Friday agreed to cut back on government subsidies for the production and consumption of fossil fuels, but stopped short of setting a deadline amid opposition from the largest subsidizers, such as Russia. The group also failed to be specific about how member countries would encourage investment in clean energy and renewables and provide financial support for such projects in developing countries.
"It's an important step toward reducing global emissions but it's not enough," said Jennifer Haverkamp, the international climate policy manager at Environmental Defense Fund.
The announcement likely foreshadows difficult international talks in Copenhagen in December, when countries will meet to negotiate an international climate treaty to succeed the Kyoto Protocol, which expires in 2012. The U.S. never ratified the treaty, saying it would harm its economy.
Negotiators had hoped to lay some of the foundation for climate finance architecture, an essential factor for developing countries to commit to emission reductions. At the last major international summit, finance ministers had been directed to draft working proposals that would guide what institution would channel hundreds of billions of dollars from developed countries to developing economies, and what financing mechanisms would be allowed. Major disagreements between developing and developed nations continued to stall progress there.
"Copenhagen is in trouble, and the G20 didn't change that," said Michael Levi, a senior energy expert at the Council on Foreign Relations.
But Levi said the agreement on subsidies shouldn't be discounted as a failure in climate and energy negotiations even though the communique didn't include specific schedules.
"Ultimately we're going to deal with climate change through targeted initiatives, and the G20 has focused on one broad but well-defined area where we can make real progress that helps with climate change and energy security at the same time," Levi said.
The International Energy Agency said that if developing nations were to eliminate subsidies over the next several decades, greenhouse gas emissions could be cut by more than 10%. Cutting subsidies helps to reduce demand, particularly in times of supply shortages such as the one that gripped the world last year when oil prices hit near $150 a barrel.
Levi also said while no specific date was given, the G20 used several references that pointed to a 2020 date. Under the communique, finance and energy ministers are expected to return to the next summit with more concrete plans. "They don't spell it out, but they've clearly chosen words and references that roughly indicate a 10-year time frame.
The oil industry decried what targeting subsidies in the U.S. could mean, saying cutting back on the billions of dollars in tax breaks given to the industry would raise fuel costs and make it less attractive to drill for oil and natural gas.
"Does the president really think it wise to eliminate tax provisions that encourage investment in technology and exploration and development and would likely constrict future energy supplies, raise energy costs and kill jobs?" said Jack Gerard, the president of the American Petroleum Institute, in a statement.
In the U.S., Democratic leaders have already begun cutting back on some subsidies. Last year, Congress scaled back a tax deduction for domestic oil and gas production to make room for an extension of tax breaks for the solar and wind industries. The Obama administration has proposed repealing that tax break entirely, as well as one that allows companies to write off intangible drilling costs such as renting rigs, among others.
White House officials said targeting subsidies for only those that need them the most - instead of subsidising businesses, and the middle classes - would free up government funding for other spending, such as for infrastructure. For example, the U.S.'s Low Income Home Energy Assistance Program wouldn't be targeted, officials said.