There Are 800 Fossil Fuel Subsidies Around The World
There are 800 different programs around the world that subsidize fossil fuels, according to a new report from the OECD. The OECD released the report ahead of the international climate change negotiations set to take place in Paris in December, where the world has a “moral imperative to reach an ambitious and actionable agreement.”
Tackling climate change will be a monumental task, but key to the effort will be scrapping “lose-lose” fossil fuel subsidies, as the OECD calls them. Subsidizing oil, natural gas, and coal leads to distortions in prices, contributes to overconsumption of energy, and saps developing countries of revenues that could be used for much better investments in education and infrastructure.
They also lead to environmental fallout, with capital flowing to pollution-heavy industry and energy extraction. These investments, once made, can last for decades, essentially “locking-in” pollution for a long time to come. That is one of the glaring downsides to subsidizing fossil fuels. “Because they change the stream of income investors expect to receive for holding a particular asset, those subsidies influence investment choices and change the allocation of capital across sectors. In the case of certain fossil-fuel subsidies, there is therefore the risk that investors end up favouring sectors that produce fossil fuels or use them intensively, at the expense of cleaner forms of energy and other economic activities more generally,” the OECD wrote.
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The report only surveyed the OECD member countries (consisting of Western Europe, Japan, Korea, North America, and a few other rich countries), plus Brazil, China, India, Indonesia, Russia, and South Africa. All told, the OECD concludedthat the world subsidized fossil fuels to the tune of $160 to $200 billion per year between 2010 and 2014, across 800 subsidy programs. That is much more than the $121 billion that renewable energy receives each year.
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