Progress in reducing fossil fuel subsidies is “alarmingly slow”
Global progress in cutting fossil fuel subsidies is “alarmingly slow”, the Organisation for Economic Cooperation and Development (OECD) warned on Monday.
A subsidy is money given by the state to either keep the price of a good or service down, or help companies operate more effectively.
According to the OECD, the world’s richest nations are spending up to $200bn (£130bn) a year subsidising fossil fuels.
The OECD’s 2015 Inventory of Support Measures for Fossil Fuels reveals that since the last inventory in 2013 fossil fuel subsidies have dropped slightly. However, it noted that governments efforts across the world to cut back on fossil fuel subsidies fall short of the measures required to tackle climate change and promote clean energy.
A reduction in subsidies for oil, coal and natural gas would help cut air pollution, prompt a shift to more sustainable energies, and end up saving money.
“We are totally schizophrenic,” said OECD Secretary-General Angel Gurria. “We are trying to reduce emissions and we subsidise the consumption of fossil fuels” which causes global warming.
“Support for fossil fuels seems to have peaked, but global progress remains alarmingly slow,” he added. “The time is ripe for countries to demonstrate they are serious about combating climate change, and reforming harmful fossil fuel support is a good place to start,”
“We must change the course,” Gurría said as he announced an inventory of nearly 800 measures that support the extraction, refining or combustion of fossil fuels.
“This new OECD inventory offers a roadmap to turn around harmful policies that are a relic of the past, when pollution was still seen as a tolerable side effect of economic growth.”
Around two-thirds of the measures were introduced prior to 2000, “in a very different economic and environmental context”.
The G20 nations pledged in 2009 to gradually end inefficient subsidies for fossil fuels.
“Support now seems to follow a downward trend after having peaked twice in 2008 and 2011-12,” the OECD said.
“By distorting costs and prices, fossil-fuel subsidies create inefficiencies in the way we generate and use energy,” Gurría said. “They are also costly for governments, crowding out scarce fiscal resources that could be put to better use, such as strategic investments in the education, skills and physical infrastructure that people most value in the 21st century.
“But most importantly, fossil-fuel subsidies undermine efforts to make our economies less carbon-intensive while exacerbating the damage to human health caused by air pollution.”
For over a year now the OECD has been pushing for an agreement to phase out a type of coal subsidy that helps rich countries export technology for coal generation. However, talks last week in Paris failed to reach a deal and negotiations on the matter are not set to resume until November 16.