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Page added on November 12, 2013
The Fossil Fuel Welfare State.
While world leaders gather in Warsaw to fight climate change, their governments spend half a trillion dollars on carbon subsidies.
When we talk about the Great Energy Shift to a shiny green future, keep in mind that there’s plenty of green bankrolling the dirty power past. That point was driven home yesterday by the release of a report detailing the extent governments subsidize fossil fuels.
Global subsides for fossil fuels paid to companies and individuals reached more than half a trillion dollars in 2011, the latest year full data was available, according to an analysis from the Overseas Development Institute (ODI), a UK-based nonprofit that advocates rolling back such incentives.
In the 11 wealthy nations that make up the Organization for Economic Cooperation and Development, ODI estimates subsidies for fossil fuels range from $55 billion to $90 billion annually. In 2011, that figure reached $74 billion, or $112 for every person. No coincidence that the G20 group of nations accounted for 78% of the world’s carbon spew in 2010.
“While governments have pledged to avoid dangerous climate change, their approach to fossil fuel support is taking economies in the other direction,” states the report, issued days before world leaders gather in Warsaw for the latest round of climate change talks. “Instead of raising the price of carbon emissions, they are subsidizing firms to over-produce and consumers to over-use carbon-intensive fuels.”
In some countries, such subsidies for oil, natural gas and coal exceed 10% of gross domestic product.
Spending by rich countries on fossil fuel subsidies outstrips outlays to help developing countries develop renewable energy and cope with climate change by a margin of 7 to 1.
Governments in developing countries themselves help subsidize fossil fuels, often by lowering the cost of gasoline and electricity for their citizens. (According to the ODI, in countries such as Egypt and Pakistan fossil-subsidies exceed their national deficit.) In fact, such consumer subsides often far exceed spending on health care. Of course, subsidizing fossil fuel use only exacerbates health problems by exposing people to higher levels of pollution.
National governments aren’t the only culprits in such fuelish behavior. International lenders such as the World Bank also promote fossil fuel projects over carbon-free energy. More than 75% of energy financing in developing countries went to fossil fuel projects, according to ODI. The World Bank, for instance, actually boosted spending on fossil fuel projects to $2.7 billion last year.
3 Comments on "The Fossil Fuel Welfare State."
BillT on Tue, 12th Nov 2013 4:11 am
Most of the US oil subsidies are not even counted. The US military is nothing more than the plundering hand of big petro. The highway system is built and maintained for oil powered vehicles. The auto industry is subsidized, the airline industry is subsidized, etc. When it ia ALL included, I think that oil subsidies in the US exceed a trillion dollars per year, dwarfing Russia.
And, the US exported their pollution to Asia. Add in the pollution caused to make US imports and again … the US is number 1!
Solarity on Tue, 12th Nov 2013 4:36 am
“Global subsides [sic] for fossil fuels paid to companies and individuals
reached more than half a trillion dollars…”
Such a claim must always be followed by a question: where is the money-trail?
After all, $500 billion is hard to hide in financial statements of either
governments or petro-enterprises. The referenced ODI report is full of
glitering generalities, but fails to provide any auditable detail.
A reading of the ODI document indicates that apparently most of their ‘guilty
incentives’ are actually tax breaks, not subsidies. A subsidy (Webster’s)
is money paid by grant or contribution. Because of this misinterpretation, The Atlantic and the ODI report are utterly disingenuous.
DC on Tue, 12th Nov 2013 6:42 am
BillT is quite right. The subsidy rabbit-hole for fossil-fuels is a very very deep one.
-Research ‘Credits’
-Preferential tax-rates.
-Depletion write-offs
-Royalty-free(or practically) oil leases on public lands. See the US of Oil and Province of Alberta for shining examples
-Little or No environmental enforcement of existing laws. Total failure of govt to collect when oil companies spill. GoM, Valdez, Kalamazoo, countless others.(Probably the biggest subsidy of all to big oil-they can spill-and-forget. And Govt. helps them every step of the way.
Despite these charts trying to make the turd-world look like subsidy junkies, the US is by far, the KING of direct and in-direct subsides to oil corporations.
Govts have spent most of the last century enabling one kind of transportation system, one mode of urban living, and one way to distribute goods. For every dollar spent on building oil-only infrastructure in North America, less than a penny went to non-oil alternatives. The sad, or non(existent) state of mass-transit and the complete dominance of cars-only flat urban sprawl is a powerful reminder of what perverse subsidies can do to a nation, and to a world.
That is to say, bring it to the brink of complete ruin.