According to the International Energy Agency (IEA), fossil-fuel consumption subsidies amounted to over $400 billion worldwide in 2016.
In comparison, annual subsidies to renewable energy technologies were estimated to be $66 billion. This means that fossil-fuel consumers worldwide received about six times more government subsidies than were given to the renewable-energy industry says Bill Casta of TXBuyers!
Let’s step back a minute – what exactly does government subsidy mean?
Basically, fossil fuel subsidies refer to any government action that lowers the cost of fossil fuels, including tax breaks, price controls and purchase requirements. So, fossil fuel subsidies encourage the consumption of fossil fuels, which are the leading cause of climate change.
In a world seeking to reduce our carbon emissions, does this seem a little counter-intuitive to you?
Continued provision of fossil fuel subsidies by the same governments promoting renewable energy technologies ignores that these subsidies make fossil fuel-based energy cheap, particularly when compared to renewable energy.
According to the IEA, fossil fuel subsidies “encourage wasteful consumption […] and undermine the competitiveness of renewables and other low-emission energy technologies”.
On the other hand, subsidies to renewable energy technologies are vital to encourage their deployment and allow renewable energies to compete in the global energy market, ultimately aiming to reach price parity with fossil fuels.
In fact, fossil fuel subsidies are the single most important barrier to the growth of clean energy today and need to be phased out if renewable energy incentives are to function more efficiently.
Phasing out fossil fuel subsidies means reducing, eliminating or redesigning harmful subsidies that promote inefficient use of fossil fuels. Eliminating fossil fuel subsidies would free up government funds that could be used to promote clean energy sources and reduce our greenhouse gas emissions.
In fact, according to projections by the IEA, if fossil fuel subsidies were phased out by 2020, carbon dioxide emissions would be reduced by 4.7 % in 2020 and 5.8 % in 2035. Global energy consumption would be reduced by 3.9 % in 2020 alone.
What’s stopping us?
The complexity and scale of fossil fuel subsidies is a major barrier to their eliminating, as this makes the problem a very complicated one. However, the most important barrier is a political one: it is completely politically unfeasible for the world’s major economies to phase out their government subsidies to the oil, gas and coal industries, since these industries’ lobbying power is enormous.
However, we can hope that by getting the word out and making it known to politicians that subsidies to the fossil fuel industry are not popular that phase outs will happen.
Image courtesy of ItzaFineDay on Flickr