20 February 2012

Global fossil fuel subsidies in 5 unforgettable graphs

As the five biggest oil companies made a record-high $137 billion in profits, these five unforgettable charts on global fossil fuel subsidies, courtesy of The Guardian, need no explanation. But by way of a very brief summary:
  • While government support to renewable power sources is subject to seemingly endless media and political scrutiny, the 500% larger subsidies given to oil, gas and coal rarely get much attention.
  • Governments and taxpayers spent $409 billion in 2010 supporting the production and consumption of fossil fuels, three-quarters of which went to the oil industry. 
  •  Just 8% of that $409 billion went to the poorest 20% of the population
  • Global subsidies for fossil fuel consumption are set to reach $660 billion in 2020 unless reforms are passed to effectively eliminate this form of state aid, according to International Energy Agency chief economist Fatih Birol.
  • Eliminating fossil fuel consumption subsidies by 2020 would cut global energy demand by 4 percent, cutting demand for oil by 3.7million  barrels a day.
  • Dropping subsidies could slow growth in CO2 emissions by 1.7bn tonnes a year, equivalent to the total emissions of the UK, Germany, Italy and France.
  • In Australia, the SMH reported that taxpayers spend about 11 times more encouraging the use of fossil fuels than on climate change programs. Fossil fuel incentives and subsidies will cost about $12.2 billion this financial year in Australia, compared with $1.1 billion spent on programs designed to cut greenhouse gas emissions and boost research.
Its hardly as though big oil needs the cash. The five biggest oil companies made a record-high $137 billion in profits in 2011, and have made more than $1 trillion in profits from 2001 through 2011. And every $1 spent on lobbying in Washington, the big five received $30 worth of tax breaks.
     On 24 January 2012, Independent US Senator Bernie Sanders pledged to introduce legislation to repeal federal tax breaks and subsidies to the fossil fuel industry, declaring at a Capitol Hill rally that "the most profitable corporations in the world do not need subsidies from the American people." Ditto Australia.
Additional sources: Reuters, IBTimes

1 comment:

  1. Actually, the five charts on global fossil-fuel subsidies prepared by The Guardian DO need explanation.

    The "fossil-fuel consumption subsidies" reported by the IEA relate only to developing and emerging economies, topped by oil-exporting and natural-gas exporting countries. The values are estimated by comparing domestic prices with world prices, and where world prices are higher, they multiply domestic consumption of the fuel concerned by the price gap. They do not directly measure taxpayer-financed subsidies, though in a few cases taxpayer-financed subsidies may be being used to artificially suppress domestic prices. Mainly, prices for fossil fuels are lower in the the main subsidizing countries because of price regulation (especially where the fuel is supplied by a state-owned enterprise) or through export taxes or other restrictions on foreign sales.

    Note that the IEA does not measure any consumption subsidies in OECD (i.e., industrialized) countries, such as the United States). The only OECD member countries included in their list are Korea and Mexico.

    On the other hand, most of the estimates of subsidies to renewable energy that the IEA calculates relate to those provided by OECD countries, chiefly in EU member states (such as Germany) and the United States.

    So, lets compare apples with apples, not with oranges.

    At the OECD, we have done a first cut estimate of budgetary support and tax expenditures relating to fossil fuels in 24 or the OECD's 34 member countries. The value of these transfers (very few of which keep the domestic price of a fuel below the world price) was on the order of $60 billion in 2010. That's counting transfers to producers as well as to consumers.


    While we haven't yet done that, expressing these totals in terms of $ per unit of energy would show that they are relatively small compared with the rates of subsidization of many forms of renewable energy.

    That is not to defend any subsidization of fossil fuels. But if the argument is one (as I have seen often) that renewables would thrive if only we got rid of the fossil-fuel subsidies, the case is exaggerated. Certainly renewable energy would have a (slightly) easier time competing in OECD countries, and a much improved situation in countries currently subsidizing fossil-fuel consumption (which is not, by any means, all developing countries), it would not be enough.

    Finally, I would suggest caution in interpreting any estimates of subsidies to fossil fuels. Some parts of these estimates, including the Australian estimates you cite, relate to transport rather than fuels directly. While these subsidies certainly influence driving, they benefit ALL energy sources used for propulsion. That is to say, they benefit biofuels as much as petroleum fuels.