Interested in this kind of news?
Receive them directly in your inbox. Delivered once a week.
In its latest World Energy Outlook report published on 12 November, the generally conservative International Energy Agency has calculated that the global value of subsidies to fossil fuels is $548 billion (€439 billion), more than half of which was used for oil. This figure is more than four times the amount invested in energy efficiency measures.
While it acknowledges the environmental damage caused by fossil fuel subsidies, notably through encouraging excessive fuel consumption, the report is most critical of the economic damage such subsidies cause. It says the resulting market distortions lead to ‘a misallocation of resources, which results in a longer term economic cost’.
It is also critical of the dampening effect of subsidies on innovation in clean energy techniques, despite commitments to severely limiting fossil fuel use. ‘Fossil fuel subsidies rig the game against renewables and act as a drag on the transition to a more sustainable energy system,’ it says. It adds that if governments stopped paying subsidies on fossil fuels, they would no longer have to pay them on renewables in most cases.
In the same week, a report published to coincide with the G20 summit in Brisbane says the 20 leading industrial economies spend $88 billion a year subsidising exploration for new oil, gas and coal. It compares global spending on fossil fuels with renewable energy, and finds that more than seven times is spent on fossil fuels than renewables.
The report, The Fossil Fuel Bailout, is published by the American NGO Oil Change International and the Overseas Development Institute, a think tank in the UK. A spokesperson from the ODI said: ‘This is real money which could be put into schools or hospitals. It is simply not economic to invest like this.’