28 August 2008

Fossil fuel subsidies: facts and figures

I'm pleased to see that the United Nations has tried to quantify subsidies to fossil fuels:
Globally, governments spend some $300 billion on fuel subsidies that encourage consumption, delay transition to cleaner energy sources, and mainly benefit the already-rich even though most of the programs are intended to help the poor with fuel costs. "In the final analysis, many fossil-fuel subsidies are introduced for political reasons but are simply propping up and perpetuating inefficiencies in the global economy," said U.N. Environment Program director Achim Steiner.... Russia is the largest fuel-subsidy spender, throwing down some $40 billion a year mainly to subsidize natural gas; Iran is in second place, spending about $37 billion a year on fuel subsidies. You're not fueling anyone, 'Grist'
Perhaps surprisingly, most of these subsidies are given by governments of the developing countries. The UN report says that the 2006 Stern Report:
estimates that direct government support to the deployment of low-carbon energy sources worldwide is currently of the order of $26 billion per year: $10 billion on deploying renewable sources of electricity and around $16 billion on supporting existing nuclear power. Reforming Energy Subsidies (pdf)
The problem with subsidies is that they are so difficult to terminate, even decades after they are shown to be economic nonsense, environmentally disastrous and socially inequitable. Subsidies of this sort finance a coalition opposed to their removal.

For more on fossil fuel subsidies see: End Oil Aid, which has a database showing subsidies to the oil industry by country; and Oil Change USA; an informative, entertaining site which looks at the influence of oil in the US.

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