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Energy and Global Warming News for March 9: Governments spend $500 billion a year to subsidize fossil fuels; U.S. cle...

2010-03-09 12:01
Governments estimated to spend $500 billion a year to subsidize fossil fuels The world might be spending as much as $500 billion annually to subsidize fossil fuels, researchers working at the direction of President Obama and other leaders have found. But a draft report of the study, obtained by E E, shows a heavy emphasis on the financial assistance that developing countries give to make energy more affordable to poor consumers. Meanwhile, researchers were unable to come up with harder numbers for the more controversial tax breaks, research and development support, and other measures by which wealthy countries subsidize the production of fossil fuel energy. Analysts familiar with the report said the next version is expected in April and a final report is due before the Group of 20 world leaders meets in Toronto in June. There, the G-20 leaders are expected to further a pledge from last year to phase out what they described as inefficient fossil fuel subsidies that encourage wasteful consumption, and to help reduce carbon emissions. Energy pricing, including subsidies, is at the heart of the sustainable development agenda, researchers from the World Bank, International Energy Association, Organisation for Economic Co-operation and Development and Organization of Petroleum Exporting Countries wrote in the draft. A 8216;challenging agenda 8217; ahead Removal of energy subsidies could generate large budgetary and off budgetary savings, which could in turn be invested in more desirable uses, notably targeting the poor and increas ing access to energy services and better serving the climate change objectives, the authors wrote. Environmental groups widely laud those goals and have long pressed governments to redirect money that makes dirtier fuels artificially cheaper toward the development of renewable energy. But many also criticize what they see as an emphasis on consumer subsidies. According to the G-20 draft, the most recent calculation of how much money industrialized countries spend to prop up fossil fuel production comes from a 1998 report. That $19 billion to $24 billion annual estimate has grown at least fourfold, analysts say. The authors indicated that they intend to come up with new figures. But they also pointed out that the variety of tax breaks and other policies industrialized countries impose are harder to calculate than the relatively simple consumer subsidies. At the same time, experts noted, oil and gas lobbies also fight hard to keep the definitions of subsidies narrow, increasing the difficulties. In a nod to the political firestorm that is likely to erupt when economists truly start to delve into producer subsidies, the authors wrote, a challenging agenda ahead emerges including the agreement on a common methodology, as well as improved transparency and reporting. Opposition likely from oil companies and the poor U.S. oil industry officials oppose the G-20 plan and argue that eliminating assistance to oil and gas threatens th...
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