Global Fail: Govts Pour $500 Billion Into Fossil Fuel Subsidies

While greenhouse gas emissions reach record levels, governments across the world are pouring hundreds of billions into fossil fuel subsidies, fostering “perverse incentives” to continue the race towards climate doom, a new report details.

Governments are “subsidizing the very activities that are pushing the world towards dangerous climate change,” charges a new report. (Photo: Cam Gray/cc/flickr) The report, Time to Change the Game, from the UK-based think tank Overseas Development Institute (ODI) explains how the subsidies—amounting to over $500 billion globally in 2011—are thwarting a switch to a low-carbon economy.

“The rules of the game are currently biased in favor of fossil fuels,” stated report author Shelagh Whitley.

“The status quo encourages energy companies to continue burning high-carbon fossil fuels and offers no incentive to change. We’re throwing money at policies that are only going to make the problem worse in the long run by locking us into dangerous climate change,” stated Whitley.

Though the subsidies pad the pockets of the industry, the report’s Executive Summary states that if governments’

aim is to avoid dangerous climate change, [they] are shooting themselves in both feet. They are subsidizing the very activities that are pushing the world towards dangerous climate change, and creating barriers to investment in low-carbon development and subsidy incentives that encourage investment in carbon-intensive energy.

In addition to the U.S., the countries with the greatest fossil fuel subsidies include Russia, Australia, Germany and the UK.

“The inconsistencies between climate goals and energy policies are becoming increasingly stark,” writes ODI director Kevin Watkins. “Germany is providing lavish support for the construction of new coal plants. Britain offers generous tax concessions for oil and gas exploration, including bumper deals for companies involved in fracking. The United States spends heavily to subsidize gasoline and other fossil fuels. In all of these cases, bold climate-change targets are being undermined by business-as-usual subsidies.”

In some countries, including Pakistan, Venezuela and Bangladesh, fossil fuel subsidies are significantly greater than domestic health expenditures.

And while some renewable energy subsidies exist, they’re no match for those of fossil fuels. From the report:

At a global scale, today’s fossil fuel subsidies dwarf support for renewables. The IEA has estimated that for every $1 of support for renewables in 2011, $6 was spent on fossil fuel subsidies.

Among the reasons the report lists for why subsidies exist are “special interests.”

In the US, individuals and political-action committees affiliated with oil and gas companies have donated $239 million to candidates and parties since the 1990 election.


The benefits of these subsidies are often concentrated among specific actors, while the costs are spread across the general population.

Eliminating the fossil fuel subsidies would not only be a better investments and climate approach, it would also have economic and social benefits, according to the report. To realize those benefits, the G20, responsible for 78% of global carbon emissions from fuel combustion in 2010, should end all fossil fuel subsidies by 2020.

The report urges nations at the upcoming UN climate talks in Warsaw to take up the issue and to agree on a timeline for the phase-out.

Eliminating fossil fuel subsidies would “be the mother of all win-win scenarios,” ODI director Kevin Watkins told the BBC.

“You’d have a win for taxpayers, a win for governments north and south and you’d have a win for the planet as well.”

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In tandem withe the report, the ODI released a series of infographics including the ones below:


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Source: Common Dreams