Which fossil fuel subsidies would you cut?

Posted in: Comment, News and Updates

If you are of a particular frame of mind, it is fashionable these days to call for renewable energy subsidies to be cut / phased out / stopped (according to taste).  They are, after all, inflating our tax and electricity bills – and then there are all those unsightly turbines and solar farms be-spoiling our green and pleasant back-yards.  Subsidies for nuclear power get an easier ride, probably because no one really understands them – including, I suspect, those smart folk in the Department of Energy and Climate Change.

Fewer currently call for the abolition of subsidies on fossil fuel use – although the IMF is starting to.  The Guardian ran a story last week with the headline: "G20 countries pay over $1,000 per citizen in fossil fuel subsidies, says IMF".

The IMF's estimate of the level of global fossil fuel subsidies is $5.3tn a year.  It calculates that ending these would slash global carbon emissions by 20%.  Whilst much of these subsidies include direct payments, taxbreaks and cheap fuel (particularly in the petroleum-rentier states), the Guardian says that the largest part is the costs left unpaid by polluters and picked up by taxpayers, and include the impacts of local air pollution and floods, droughts and storms being driven by climate change – so-called externalities.  In the UK, these cost the NHS "billions", or so 'tis said.

One way (maybe the only effective way) of dealing with such externality costs is through a robust carbon tax, a policy favoured by the Economist.  See this, and this.  It would be opposed, equally robustly, by vested interests of all kinds.  Using it to replace part of VAT would be one way of easing the pain.  Finally, the Guardian piece ends with a stunning graphic which shows how much gas has been burned since you loaded the page.  I got to 50million cubic metres in a short time before I gave up in something close to despair.

Posted in: Comment, News and Updates


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