Cutting fossil fuel subsidies could provide half required carbon savings - IEA chief
Sun 22 January 2012
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Eliminating subsidies for coal, gas and oil could save the equivalent of Germany's total annual greenhouse gas emissions each year by 2015, according to one of the world's leading energy experts.
Speaking to the Guardian, Fatih Birol, chief economist at the International Energy Agency (IEA), said such a move could provide half of the carbon savings needed to stop dangerous levels of climate change.
While the G20 pledged in 2009 to phase out such fossil fuel subsidies in the "medium term", the amount (hundreds of billions) that governments spend on subsidies rose again in 2010.
The World Bank economist Lord Nicholas Stern and green groups have also called for their removal.
"Energy markets can be thought of as suffering from appendicitis due to fossil fuel subsidies. They need to be removed for a healthy energy economy," said Birol.
"Energy is significantly underpriced in many parts of the world, leading to wasteful consumption, price volatility and fuel smuggling. It's also undermining the competitiveness of renewables."
According to IEA research, 37 governments spent $409bn on artificially lowering the price of fossil fuels in 2010. Critics say the subsidies significantly boost oil and gas consumption and disadvantage renewable energy technologies which received only $66bn of subsidies in the same year.
Birol and the IEA said that a phase-out would avoid 750m tonnes of CO2 a year by 2015, potentially rising to 2.6 gigatonnes by 2035, a level sufficient to provide half the emissions reductions needed to limit global warming to 2C, considered the limit of safety by many scientists.
"Fossil fuel subsidies are a handbrake as we drive along the road to a sustainable energy future," he said. "Removing them would take us half way to a trajectory that would hold us to 2C."
Most of the world's fuel subsidies are given out in transitional and developing countries – especially those which themselves export fossil fuels. Sometimes the policies are seen as a way to alleviate poverty, but IEA analysis suggests that the poorest members of society do not see their fair share of the benefits.
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