How long would the fossil fuel economy last if we took it off life support?
Or to state the question more narrowly and less provocatively, what would happen if we removed existing subsidies to fossil fuel production?
Some fossil fuel producers are still highly profitable even without subsidies, of course. But a growing body of research shows that many new petroleum-extraction projects are economically marginal at best.
Since the global economy is addicted to energy-fueled growth, even a modest drop in fossil fuel supply – for example, the impact on global oil supplies if the US fracking industry were to crash – would have major consequences for the current economic order.
On the other hand, climate justice demands a rapid overall reduction to fossil fuel consumption, and from that standpoint subsidies aimed at maintaining current fossil fuel supply levels are counterproductive, to say the least.
As a 2015 review of subsidies put it:
“G20 country governments are providing $444 billion a year in subsidies for the production of fossil fuels. Their continued support for fossil fuel production marries bad economics with potentially disastrous consequences for the climate.” 1
This essay will consider the issue of fossil-fuel production subsidies from several angles:
- Subsidies are becoming more important to fossil fuel producers as producers shift to unconventional oil production.
- Many countries, including G20 countries, have paid lip service to the need to cut fossil fuel subsidies – but action has not followed.
- Until recently most climate change mitigation policy has been focused on reducing demand, but a strong focus on reducing supply could be an important strategy for Green New Deal campaigners.
Ending subsidies to producers can play a key role in taking the fossil fuel economy off life support – or we can wait for the planet to take our civilization off life support.
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