US & China Fossil Fuel Subsidies Exceed $20 Billion Annually

As an outcome of the G20 meeting held in China earlier this month, both China and the United States volunteered to publish peer reviews of their current fossil fuel subsidies, and the results show that, together, the two countries are annually providing over $20 billion in inefficient fossil fuel subsidies.

The two reports are intense and intricate, as well as quite lengthy. For anyone wanting to investigate the intricacies of both countries’ fossil fuel subsidies programs, the links are as follows:

• A report on the G20 peer review of inefficient fossil-fuel subsidies [China] (PDF)
• A report on the G20 peer review of inefficient fossil-fuel subsidies [United States] (PDF)

The reports each identified inefficient fossil fuel subsidies currently in play. The United States report identified 16 separate fossil fuel subsidies, all falling within upstream exploration, development, and fossil fuel extraction activities, whereas the Chinese report identified 9 separate subsidies across multiple fields, including upstream fossil-fuel activities and those benefiting professional fuel users — such as fishermen, foresters, taxi drivers, and public transport companies.

The cumulative value of the fossil fuel subsidies identified by the reports amount to over $20 billion — $8.1 billion in the United States, and $14.5 billion in China.

Despite the self-identification process, however, there is no indication of plans to remove the 16 inefficient US fossil fuel subsidies, most of which would require legislation in Congress to remove them, something that is not likely given the current political environment in the United States.

“The US report reminds us yet again of the staggering breadth of support for Big Polluters,” exclaimed Friends of the Earth Climate and Energy Campaigner Lukas Ross. “As Congress continues to obstruct meaningful reform, stopping the flow of polluter cash into our elections is more crucial than ever. Dirty money in our elections and dirty subsidies in our economy go hand in hand.”

On the other hand, China’s self-identification includes a timeline for reform of several of the subsidies identified.

“Many of China’s energy policies are in a state of flux as the Government plans to introduce new reforms and laws that should affect future energy pricing and taxes,” the authors of the Chinese report wrote.

“This adds to recent policy initiatives that reaffirmed China’s commitment to move toward more market-based prices and toward taxes that better reflect the environmental damage that economic activities can cause.

“The reform of China’s fossil fuel subsidies is a necessary step toward that goal as it holds the prospect of contributing to pollution reduction while removing one major source of price distortions in the economy.”