subsidies

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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Worldwatch Report on Fossil-Fuel Subsidies: With No Gain, Less Societal Pain

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Aug 212012

By Cheryl Kaften, August 21, 2012

Total subsidies for renewable energy stood at $66 billion in 2010 – less than one-tenth of the government financing provided globally to the fossil fuel industry, according to new research from the Washington, DC-based Worldwatch Institute.
(…)
“These so-called hidden costs, or externalities, are in fact very real costs to our societies
that are not picked up by the polluter and beneficiary of production but by all taxpayers,” said Alexander Ochs, director of Worldwatch’s Climate and Energy program and report co-author. “Local pollutants from the burning of fossil fuels kill thousands in the United States, alone, each year, and society makes them cheaper to continue down their destructive path.”

Shifting official support from fossil fuels to renewables, Ochs pointed out, is essential
for “decarbonizing” the global energy system.

Such a shift could help create a triple win for national economies by reducing global greenhouse gas emissions, generating long-term economic growth and reducing dependence on energy imports.
(…)
“At the same time, a phase-out of fossil fuel subsidies would level the
playing field for renewables and allow us to reduce support for clean energy sources as well,” said Ochs. “After all, fossil fuels have benefited from massive governmental backing worldwide for hundreds of years.”

Progress toward a complete phase-out, however, has been minimal, according to Ochs. The
2009 pledge by the Group of 20 major economies to reduce “inefficient fossil fuel subsidies” has been left “vague and unfulfilled.” The lack of a definition has left countries to make their own determination if their subsidies are inefficient. As of August 2012, G20 countries had not taken any substantial action in response to the pledge: Six members opted out of reporting altogether (an increase from two in 2010), and no country has yet initiated a subsidy reform in response to the pledge.

[You can find the whole article HERE; further reporting HERE | HERE | HERE | HERE]

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].