Former BP boss says subsidies are incompatible with combating climate change and should be eliminated before setting carbon price to curb emissions

The chairman of the world’s biggest commodity trader has called for an end to subsidies for fossil fuels.

Tony Hayward, the chairman of Glencore Xstrata, told a conference on climate and business in Paris that the subsidies were incompatible with combating climate change. He also called on rich countries to provide financial assistance that would allow poorer ones to cut their greenhouse gas emissions using renewable energy.

But Hayward, who headed the oil giant BP during the Gulf oil spill disaster, added an important caveat: subsidies must be eliminated as a prelude to setting a tax or price on carbon dioxide emissions, he said.

This would mean delaying carbon pricing until the end of subsidies has been achieved – a goal that has eluded the world despite many years of urging from influential groups, such as the International Energy Agency. Glencore has major interests in fossil fuels and other commodities that would be hit by a carbon tax or other form of carbon pricing.

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The call to end subsidies for fossil fuels echoes one from Lord Stern, the former World Bank chief economist, in the Guardian this week. But Lord Stern has also called for a price to be set on carbon dioxide, as an urgent way of encouraging businesses to cut their greenhouse gas emissions.

A report published on Thursday by Thomson Reuters found that the greenhouse gas emissions from 32 of the world’s biggest energy companies, which make up nearly a third of global carbon output, had risen by 1.3% in the period from 2010 to 2013, in marked contrast to scientific recommendations that their carbon should be cut significantly if the world is to avoid dangerous levels of global warming.

Business leaders were meeting in Paris this week, under the auspices of the French government, to prepare for a crunch conference this December, also in Paris, at which world governments have promised to forge a new global agreement on climate change, to take over from current commitments to limit emissions that expire in 2020.

The issue of how developing countries should lift their populations from poverty – and whether this will require the use of fossil fuels, or can take place along cleaner lines – is set to be a key issue at the talks later this year. Some countries, and many climate sceptics, argue that poorer nations should be allowed to use high-carbon fuels to build their economies, as industrialised nations have done over the last century and a half.

Ali Al-Naimi, the oil minister of Saudi Arabia, told the conference that without fossil fuels, “we would not be where we are now” in terms of economic development. He noted that more than 1bn people today still lack access to electricity, which deprives them of economic and educational opportunities.

But he also said that his country – the world’s biggest oil exporter was working towards a future, potentially within a few decades, in which fossil fuels would no longer be needed. This would include plans, previously laid out, to build a massive network of solar power that could be exported to other countries.

The World Bank called for investment in renewable energy, for poorer countries in particular, to be tripled by 2030, to about $1.3tn annually. This would help to lift people from poverty and provide countries with a way out of the problems of air pollution, much of which is caused by the use of coal-fired power generation.

Segolene Royal, the French minister for environment who will lead the Paris summit in December, told the business and climate conference that developing countries should be enabled to pursue economic growth in a low-carbon fashion, rather than industrialising their economies using fossil fuels.

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She said: “Africa [and other developing countries] have the right to develop without fossil fuels.” This would provide an opportunity to create jobs and reduce poverty, she said, and called for “stable and clear” rules to be set at the December conference.

She said: “When the cause of the environment progresses, so does democracy and so does peace.”

Credit Agricole, the French bank, said that it would cut its financing for fossil fuel development, the second major bank to do so after Bank of America.