CO2 Emissions Global fossil fuel subsidies equal $550 billion

Published on June 11th, 2010 | by Zachary Shahan

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$550 Billion in Fossil Fuel Subsidies

June 11th, 2010 by  

 
Global fossil fuel subsidies equal $550 billion

A new report out by the International Energy Agency (IEA) makes it clear that if we just stopped subsidizing the fossil fuel industry (or, at least, subsidized it a lot less) we could significantly cut climate change pollution.


 
The report found that the global fossil fuel industry receives approximately $550 billion in subsidies every year. The report was released at a meeting of G20 finance ministers in Busan, South Korea last weekend.

You would think that with increasing concerns about global warming and peak oil, subsidies would be decreasing, but the report showed that subsidies rose from $342 billion in 2007 to $557 billion in 2008.

Of course, these skew the energy market, and not in the way that we should to account for the environmental and health externalities of fossil fuels.

Obama’s Proposal to Start Phasing Out Fossil Fuel Subsidies

At the last G20 meeting in Pittsburgh, President Obama put forward the idea of phasing out fossil fuel subsidies, which garnered a considerable amount of support.

This report comes just prior to the next meeting of G20 leaders in Canada on June 26-27 where the issue is expected to be discussed further.

Hopefully, it will help to keep these key decision-makers from avoiding this topic any further.

Iran Leading the World in Fossil Fuel Subsidies

Iran led the pack with $101 billion in fossil fuel subsidies in 2008, accounting for approximately a third of the country’s budget.

“Chronic under-pricing of domestic energy in Iran has resulted in enormous subsidies and a major burden on the economy that is forcing reliance on imports of refined products,” the study concluded. “Steep economic, political and social hurdles will need to be overcome if Iran is to realise lasting reform.”

Energy Consumption and CO2 Emissions Would Drop Considerably if Subsidies Were Cut

The results of cutting fossil fuel subsidies, even slowly, would be considerable.

“The IEA predicted that phasing out subsidies over the next 10 years would lead to a 5.8 per cent cut in global energy demand – equivalent to the combined energy consumption of Japan, South Korea, Australia and New Zealand,” Andrew Donoghue of Business Green reports. “Global CO2 emissions would also be cut by about 6.9 per cent by 2020 if subsidies were withdrawn,” equal to the combined emissions of France, Germany, Italy, Spain and the UK.

More information on fossil fuel subsidies will be published in a November IEA report, The World Energy Outlook 2010. Additionally, the IEA intends to “create an online database to improve transparency around fossil fuel subsidies, which will include breakdowns by country, by fuel and by year.”

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About the Author

is tryin' to help society help itself (and other species) with the power of the typed word. He spends most of his time here on CleanTechnica as its director and chief editor, but he's also the president of Important Media and the director/founder of EV Obsession, Solar Love, and Bikocity. Zach is recognized globally as a solar energy, electric car, and energy storage expert. Zach has long-term investments in TSLA, FSLR, SPWR, SEDG, & ABB — after years of covering solar and EVs, he simply has a lot of faith in these particular companies and feels like they are good cleantech companies to invest in.



  • sidewinder

    Ahhh – so we’re talking about something “the other guy” should do to reduce global warming, not something we (25% of consumption for 5% of the population) should do.

    Well.

    Isn’t that special?

    • i think if you read this blog you can see that we are repeatedly talking about what we can do, but that $555 billion in subsidies is an important matter as well, especially for all of those people who would never run across this blog or care to do anything if it didn’t benefit their pocketbook in the short-term

  • Edwin Swanson

    Is there a preliminsary report online?

    What is so innivative about ending subsidies for obsolete technologies? Subsidies are, unfortunately, ephemerally granted by political whim to encourage new energy sources and conversion technologies. Then followed by termination. Yet stealth subsidies continue for entrenched corporations and obsolete, caqrbon-based energy sources.

    If leaders don’t understand economics in capitalistic society, then how can they establish policy to transition to the realities of the 21st century.

    Really, it is not rocket economics or science.

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