Fossil fuels have dominated the global energy market and even the global economy for a long time. You would think that such mature industries wouldn’t need government subsidies — their annual revenue and profits are mind-boggling. However, with money comes power. And that money-power has a stranglehold on governments of the world such that it convinces governments to give them even more money in subsidies. Another recent study comes to the conclusion that the total annual subsidies fossil fuel companies get from governments in the developed world comes to about half a trillion dollars. This follows a 2010 study from the International Energy Agency that found fossil fuel industries got $550 billion in annual subsidies.
It almost sounds like a joke — some of the richest companies in the world get $500 billion in government handouts. Just picture the rich, old, white men laughing their buns off about the way they have the most powerful governments in the world wrapped around their pinky fingers… or at least wrapped around the fingers that sign checks for our politicians’ election campaigns.
The latest study on this matter, Time to change the game, finds that the average resident of the world’s richest countries donates $112 a year to fossil fuel companies in the form of subsidies.
What are those subsidies for?
Well, as a press release about the new study notes, “these subsidies create perverse incentives favouring investment in carbon-intensive energy.” Yep, we’re encouraging the use of fossil fuels that harm our health, our climate, and our environment rather than using that money to transition away from these harmful sources and towards a truly clean energy economy.
The proposal from study author Shelagh Whitley is that G20 nations phase out fossil fuel subsidies completely by 2020. Whitley states:
The rules of the game are currently biased in favour of fossil fuels.
The status quo encourages energy companies to continue burning high-carbon fossil fuels and offers no incentive to change. We’re throwing money at policies that are only going to make the problem worse in the long run by locking us into dangerous climate change.
Here are just a few of the staggering statistics from Time to change the game:
- The average subsidy provided by rich governments for every tonne of carbon is $7. This is the same as the current cost of carbon in the EU carbon trading system – meaning the carbon price may as well not exist.
- Domestic subsidies in rich countries outstrip international climate finance provided to help address climate change in developing countries by a ratio of 7:1.
- In some countries – India, Pakistan and Bangladesh – fossil fuel subsidies are more than double the level of spending on health services.
- In countries such as Egypt, Pakistan, Morocco and Bangladesh, fossil fuel subsidies outweigh the national fiscal deficit.
Yep, you’ve got coal in your stocking, thanks to subsidies that have no place in a free market. Oddly, “free market idealists” never seem to complain about this matter.
Notably, G20 countries have agreed to phase out fossil fuel subsidies, with leadership on this matter actually coming from President Obama. An agreement made in September regarding the methodology for a new peer-review process of evaluating fossil fuel subsidies. This followed a 2009 agreement to phase out such subsidies. Obviously, though, they aren’t rushing through the process… 4 years and we’ve got an agreement on a peer-review process?
For more uplifting fossil fuel info, check out: Top 10 Toxic Ingredients Used In The Fossil Fuel Industries.
All images via the Overseas Development Institute
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