oil

Fossil Fuel Subsidies at $2 Trillion, Despite Global Condemnation

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Jan 302014

Despite a growing consensus that support for the oil and gas industry is unfair, inefficient and globally dangerous, there’s no actual implementation of plans to change it.

By Carey L. Biron | January 30, 2014

WASHINGTON – Global tax breaks, incentives, and various other consumption and production subsidies for the fossil fuel industry are likely topping $2 trillion each year, amounting to 2.5 percent of total gross domestic product for 2012. After a dip in the immediate aftermath of the global financial recession, these figures have risen in recent years, according to a new report from Worldwatch, a Washington-based think tank. Incentives for renewable energy sources remain tiny by comparison, estimated at just $88 billion for 2011. (…)

“In the U.S., a lot of this is just lip service. The country is really not yet walking the walk,” Alexander Ochs, director of climate and energy at the Worldwatch Institute, told MintPress. “Both nationally and internationally, we have not made any significant progress toward the goal of reducing subsidies, which was actually declared quite a long while ago. In my view, it’s outrageous that we’re not making any more progress.”

[You can find the whole story here]

Fossil Fuel and Renewable Energy Subsidies on the Rise

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Aug 212012

Alexander Ochs, Eric Anderson, and Reese Rogers | Aug 21, 2012

A recent projection places the total value of conventional global fossil fuel subsidies between $775 billion and more than $1 trillion in 2012, depending on which supports are included in the calculation.¹ In contrast, total subsidies for renewable energy stood at $66 billion in 2010, although that was a 10 percent increase from the previous year.² Two thirds of these subsidies went to renewable electricity resources and the remaining third to biofuels.³

Although the total subsidies for renewable energy are significantly lower than those for fossil fuels, they are higher per kilowatt-hour if externalities are not included in the calculations. Estimates based on 2009 energy production numbers placed renewable energy subsidies between 1.7¢ and 15¢ per kilowatt-hour while subsidies for fossil fuels were estimated at around 0.1–0.7¢ per kWh.⁴ Unit subsidy costs for renewables are expected to decrease as technologies become more efficient and the prices of wholesale electricity and transport fuels rise.⁵

Globally negotiated efforts to reduce fossil fuel subsidies have been hindered by competing definitions of subsidies. Calculation methods also vary. The common price gap approach to calculating consumption subsidies uses the difference between the observed domestic prices of energy and the world market prices as an estimate of the impacts of a country’s policies on market prices.⁶ Some oil exporters, however, argue that production cost rather than market price should be used as the baseline.⁷ The difficulties in accurately measuring data are compounded by the lack of transparency among countries with regard to energy subsidies.⁸

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Cambodia’s Hydro Plans Carry Steep Costs

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Aug 202012

By Lawrence Del Gigante, IPS News

A fisherman on the Si Phan Don riverine archipelago of the Mekong River. Credit: Courtesy of Suthep Kritsanavarin/Oxfam

NEW YORK, Aug 18 2012 (IPS) – The Cambodian government has committed to the construction of five dams along the Mekong River in order to meet a huge demand for electricity, but environmental groups warn that severe repercussions loom for this strategy. (…)

Hydroelectricity, even if a successful venture, will not solve the country’s electrification problems, other analysts say. “Right now it is relatively catastrophic, the power situation in the country,” Alexander Ochs, the director of climate and energy at the Washington-based Worldwatch Institute, told IPS. Cambodia has one of the lowest electrification rates in Southeast Asia, estimated at only 24 percent, according to the Asian Development Bank (ADB).

The government aims to raise the national electrification rate to 70 percent by 2020, according to the ADB, by expanding the grid and sourcing more than half of the needed electricity from the Mekong River. A large complication is transmitting the electricity, with only the major cities and surrounding areas having access to power lines, meaning people in rural areas will not benefit from the hydro.

“The number of people that are really connected to a grid as we know it, a modern power service or energy line, in rural areas is as little as seven percent of the population. Overall, nationwide, it’s about 15 percent,” said Ochs. Biomass is very popular for heating and cooking, predominantly burning wood for fires and stoves. “Everything else comes from off-grid or micro-grid diesel generators and this is very inefficient and very costly, a very expensive, very dirty way to produce electricity,” said Ochs.

Currently, 91 percent of Cambodia’s power plants are fuelled by imported light diesel and heavy fuel oil, not including the diesel it takes to fuel stand-alone generators. “All of this happens in a country where you have incredible renewable energy potential. It has amazing potential for wind, very, very good potential for solar,” said Ochs. Importantly, the solar potential in Cambodia is very high where it’s needed, including in the populated areas, meaning solar technologies can be installed domestically, such as solar panels on the roofs of houses, according to Ochs.

Value of Fossil Fuel Subsidies Declines; National Bans Emerging

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May 012011

By Alexander Ochs and Annette Knödler | Vital Signs, May 11, 2011

Gobal fossil fuel consumption subsidies fell to $312 billion in 2009 from $558 billion in 2008, a decline of 44.1 percent.[i] The reduction is due primarily to changes in international energy prices as well as in domestic pricing policies and demand, rather than because the subsidies themselves were curtailed. The number also does not include fossil fuel production subsidies that aim at fostering domestic supply, which are estimated at an additional $100 billion globally per year.^{^[ii]}

Fossil fuel consumption subsidies include public aid that directly or indirectly lowers the price for consumers below market price. The International Energy Agency (IEA) defines energy subsidies as “any government action directed primarily at the energy sector that lowers the cost of energy production, raises the price received by energy producers or lowers the price paid by energy consumers.”[i] Common means of subsidizing energy include trade instruments, regulations, tax breaks, credits, direct financial transfers like grants to producers or consumers, and energy-related services provided by the government, such as investments in energy infrastructure or public research.[ii] Many observers believe that fossil fuel subsidies should be phased out because they reduce the competitiveness and use of cleaner, alternative energy sources .

Please find the full article [here].

Petrocaribe: Making Our Case For Us

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Feb 092011

The Worldwatch Institute has begun implementing a Low Carbon Energy Roadmaps project to help Caribbean Small Island Developing States (SIDS) transition to a low-carbon economy. Undertaking such a transition is an immediate imperative for these states. If they can capitalize on their indigenous, renewable resources they can reduce their oil imports, reduce exposure to volatile prices, and invest any saved money in other areas of their economy. Still, it’s always nice to have someone (or something) else burnish our argument.

In 2005, Venezuelan president Hugo Chavez initiated the Petrocaribe Energy Cooperation Agreement, an arrangement that allowed 12 Caribbean nations, including the Dominican Republic, to purchase oil at a subsidized cost. Nevertheless fuel prices in the D.R. have jumped 50 percent in the last two years. Gasoline and diesel currently cost around $4.60 and $4.16 per gallon, respectively. Dominican taxi and bus drivers have recently begun taking out their frustration over higher fuel costs on Venezuela, protesting outside the Venezuelan Embassy and demanding more information on the details of the Petrocaribe program. In response, Alfredo Murga, Venezuela’s ambassador to the D.R., pointed out that Dominican authorities set their own fuel prices based on international crude oil markets. In other words, even Petrocaribe does not protect Dominicans from the vagaries of oil prices. These developments only reinforce Worldwatch’s position: such complete dependence on oil for electricity in addition to vehicle fuel is untenable for the Dominican Republic.

[Read the full Re|Volt blog here]

India’s new leadership on energy

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Nov 052010

from: Worldwatch Connect Newsletter Nov. 2010

Worldwatch’s Director of Climate and Energy, Alexander Ochs, recently returned from a trip to India more optimistic than ever about India’s role as a global leader in sustainable development. Through numerous meetings and discussions with governmental and non-governmental representatives from the Indian energy sector, Ochs advanced the work of Worldwatch’s India Program and laid the groundwork for future partnerships. And he returned with hope and enthusiasm both for India’s promise for innovative leadership and Worldwatch’s potential role in this transition.

This optimism is due in large part to what Ochs observed as a dramatic shift in attitude and approach towards energy resources and economic development in India. For the past two decades, India has shared the belief with much of the World’s developing nations that they held the right to support development with fast and cheap energy resources. Much like the United States, United Kingdom, or Germany, India would have an industrial age of rapid development supported by abundant and easily-utilized resources like coal and oil, with some regrettable but necessary negative impact on the local and global environment. The prime goal needed to be quick development at whatever ecologic expense. While this remains a widely-held paradigm, it is no longer driving the dialogue amongst a large portion of India’s policymakers and business leaders. Today, India chooses to take an active role as one of the biggest global energy markets.

Mexico to Propose Emissions Trading for Oil, Power, Center Says

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Mar 302009

By Mathew Carr, March 19 2009 (Bloomberg) — Mexico will likely propose emissions-trading programs for its oil and electricity industries when it completes a climate-protection plan next month, the Washington-based Center for Clean Air Policy said.

Emissions trading may start in Mexico in 2011 and expand to cement and metals, Alexander Ochs, director of international policy at the center, said yesterday on the sidelines of the Carbon Market Insights conference in Copenhagen.

“They have committed political leadership that understands emerging countries have to make a contribution to a global climate pact,” Ochs said. “They want to demonstrate they are progressive.” The center, an emissions-trading think tank, is advising Mexico and China in their climate plans, he said. Full article: Bloomberg_Mex