G20 fossil fuel subsidies total $452bn

fossil fuel subsidies image
Video screen capture ODI

As wind and solar start to become competitive with fossil fuels, even without subsidies, there's great excitement about the potential for a low carbon transition to pick up speed.

And that's now a very real prospect that should be welcomed and encouraged.

Let's not forget, however, that "competing without subsidies" is a somewhat misleading claim—because according to some reports, when you count their negative environmental and health impacts, fossil fuels are subsidized more than the entire world spends on healthcare.

Even if we ignore the negative externalities of fossil fuels (which we shouldn't), renewables subsidies are still small compared to the government money that goes into supporting oil, coal and gas exploration. A new report from independent think tank Overseas Development Institute (ODI) and campaign group Oil Change International emphasizes this fact—reminding us that G20 countries have been promising to slash fossil fuel subsidies for years, yet they still total $454 billion—more than 4 times the subsidies that the entire world spends on renewables.

True, fossil fuels make up a bigger piece of our current energy pie, but since when have government subsidies been best deployed to support incumbent industries and mature technologies? Surely even the free marketeers among us should be the first to argue that—if we are going to use government subsidies to support any technology—then it should go to those that are a) beneficial to our collective well-being, or b) an emerging technology/industry that is trying to compete with an established incumbent (which has become the incumbent on the back of huge public subsidies).

It's not all bad news, however. France, the US, Germany, Canada and Indonesia have all made strides to cut subsidies and restrict financing of fossil fuels. Japan, Korea, China and the UK, however, are among those being singled out for backsliding on subsidies. (See the full list of leaders and laggards here.)

With the UK government under fire for slashing renewables subsidies over apparent cost concerns, it's particularly galling to hear from The Guardian that among the subset of G7 nations, Britain was the only one to increase its subsidies to oil and gas.

Level playing field, anyone?

Tags: Coal | Economics | Oil

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