Quantcast
Environmental News for a Healthier Planet and Life

Global Fossil Fuel Subsidies Topped $620 Billion in 2011

Energy

Earth Policy Institute

By Emily E. Adams

The energy game is rigged in favor of fossil fuels because we omit the environmental and health costs of burning coal, oil and natural gas from their prices. Subsidies manipulate the game even further. According to conservative estimates from the Global Subsidies Initiative and the International Energy Agency (IEA), governments around the world spent more than $620 billion to subsidize fossil fuel energy in 2011: some $100 billion for production and $523 billion for consumption. This was 20 percent higher than in 2010, largely because of higher world oil prices.

Of the $523 billion that supported consumption, $285 billion went to oil, $104 billion to natural gas and $3 billion to coal; an additional $131 billion was divided among the three energy sources specifically for electricity use. Through these subsidies, governments cut the prices people paid for fossil energy by nearly a quarter—encouraging waste and hindering efforts to stabilize climate. 

Iran spent the most of any country to subsidize the use of fossil fuels: $82 billion, equal to 17 percent of the country’s gross domestic product. Half of that money went to oil. With domestic automotive fuel prices held far below world market prices, Tehran is snarled in seemingly endless traffic congestion and choked with air pollution. The world’s two leading energy exporters had the second and third highest subsidies: Saudi Arabia spent $61 billion, mostly for oil use, and Russia spent $40 billion, split almost evenly between natural gas and electricity use. India spent just under $40 billion, nearly 80 percent more than in 2010. China’s $31 billion, mostly for oil, rounded out the top five.

On a per person basis, Middle Eastern countries top the list. The United Arab Emirates spent a whopping $4,200 per person on fossil fuels consumption in 2011. Kuwait and Qatar each doled out more than $3,600 per person. Each of these countries ranks high on another disreputable list: the world’s top carbon emitters per capita. 

In 2009, the G-20 countries committed to gradually eliminating “inefficient fossil fuel subsidies that encourage wasteful consumption,” but they have made little measurable progress. Rising world oil prices have strained the budgets of governments that heavily subsidize gasoline and diesel use, leading a number of countries, including Morocco and Mexico, to reduce their support. In December 2010, Iran instituted a five-year program to reduce subsidies, which began by nearly quadrupling gasoline prices overnight. Without such reforms, Iran would have had even higher subsidies in 2011.

The estimated $623 billion spent to subsidize fossil fuels does not capture the full extent of support, such as certain tax breaks and years of government-funded research and infrastructure dedicated to the older, dirtier sources. In contrast, just $88 billion went to subsidies for renewable energy, most often paid to the producer. This support was almost equally divided among solar photovoltaics, wind, biomass electricity and biofuels (ethanol and biodiesel). Clearly, the deck is stacked against renewables.

The IEA estimates that phasing out all fossil fuel consumption subsidies by 2020 would cut carbon dioxide emissions in that year by nearly 2 gigatons, the equivalent of taking 350 million cars off the roads. The fossil fuel industry does not need billions of dollars in government support; in 2012, the Big Five oil companies—Royal Dutch Shell, ExxonMobil, BP, Chevron and ConocoPhillips—together raked in $137 billion in profits. Shifting subsidies from the dirty fuels of the last century to clean renewable sources, such as wind, solar and geothermal, will help speed the transition to a new and lasting energy economy.

Visit EcoWatch’s ENERGY and RENEWABLES page for more related news on this topic.

——–

Click here to tell Congress to Expedite Renewable Energy.

 

EcoWatch Daily Newsletter

General view of the empty Alma bridge, in front of the Eiffel tower, while the city imposes emergency measures to combat the Coronavirus COVID-19 outbreak, on March 17, 2020 in Paris, France. Edward Berthelot / Getty Images

Half the world is on lockdown. So, the constant hum of cars, trucks, trains and heavy machinery has stopped, drastically reducing the intensity of the vibrations rippling through the Earth's crust. Seismologists, who use highly sensitive equipment, have noticed a difference in the hum caused by human activity, according to Fast Company.

Read More Show Less
The current rate of CO2 emissions is a major event in the recorded history of Earth. EPA

By Andrew Glikson

At several points in the history of our planet, increasing amounts of carbon dioxide in the atmosphere have caused extreme global warming, prompting the majority of species on Earth to die out.

Read More Show Less
Sponsored
The "Earthrise" photograph that inspired the first Earth Day. NASA / Bill Anders

For EcoWatchers, April usually means one thing: Earth Day. But how do you celebrate the environment while staying home to prevent the spread of the new coronavirus?

Read More Show Less
Animal rights activists try to save dogs at a free market ahead of the Yulin Dog Eating Festival in Yulin city, south China's Guangxi Zhuang Autonomous Region on June 21, 2014. Jie Zhao / Corbis via Getty Images

The Chinese city of Shenzhen announced Thursday that it would ban the eating of dogs and cats in the wake of the coronavirus, which is believed to have stemmed from the wildlife trade, according to Reuters.

Read More Show Less
The Great Barrier Reef, where record-high sea temperatures in February caused its most widespread coral bleaching event. JAYNE JENKINS / CORAL REEF IMAGE BANK

Tropical coral reefs are at a critical tipping point, and we've pushed them there, scientists say. Climate change may now cause previously rare, devastating coral bleaching events to occur in tropical coral reefs around the globe on a 'near-annual' basis, reported The Guardian.

Read More Show Less