Andreas Späth

Let’s stop paying obscene subsidies for coal, oil and gas

2015-06-01 07:36

Andreas Wilson-Späth

Critics of renewable power sources like solar and wind energy will tell you that the industry wouldn’t be able to exist if it wasn’t for a generous supply of taxpayers’ money in the form of government subsidies.

There is some truth to this, of course. Just like other promising and strategic industries, renewables benefit substantially from subsidies. What the sceptics generally fail to mention is that the sums involved are absolutely dwarfed by the handouts granted to the global fossil fuel industry at the same time.

This was graphically illustrated once again by the analysis presented in a working paper published by the International Monetary Fund (IMF) last month, a report hardly mentioned in the mainstream media.

The authors estimate that in 2015, cumulative worldwide post-tax energy subsidies will reach US$5.3 trillion. That’s a staggering 6.5% of global GDP and, as the Guardian’s Damian Carrington points out, more “than the total health spending of all the world’s governments”.

Most of these subsidies arise because fossil fuel companies are able to “externalise” costs associated with the destruction their activities and products cause wherever they operate. It’s the equivalent of what war apologists call “collateral damage” – supposedly unintended, but perfectly well understood harm caused at no cost to those who perpetrate it. The coal, oil and gas companies don’t pay for this damage, but governments do, using trillions of dollars in tax money annually.

The IMF paper explains that “energy subsidies damage the environment, causing more premature deaths through local air pollution [...] and increasing atmospheric greenhouse gas concentrations” which contribute to climate change.

If such subsidies were eliminated, more than 1.5 million fewer people would die prematurely from the detrimental health effects of air pollution every year, and global CO2 emissions would be slashed by a massive 20%.

The report emphasises that subsidies are “large and persuasive” both in the developing and the industrialised world, especially in China, the USA, Russia, the European Union, India and Japan, and that the coal industry is the biggest recipient of subsidies, which tend to discourage much needed investments in energy efficiency programmes, energy infrastructure development and renewable energy alternatives.

To put the annual figure of $5.3 trillion in perspective, it’s illustrative to note that the renewable energy industry receives a mere $120bn per year – and that’s an industry which now employs some 7.7 million workers worldwide, 18% more than last year.

Let’s also keep in mind who is doing the subsidising: governments who have been aware of the threat of climate change for decades and who, after many hours of negotiations, have yet to come up with an effective plan to reduce greenhouse gas emissions to safer levels.

Let’s also remember who the recipients of these handouts are: some of the biggest, most profitable companies the world has ever seen, including Total, Royal Dutch Shell, Exxon Mobile, BP, Saudi Aramco, along with China’s Siopec Group, the China National Petroleum Corporation and PetroChina, as well as Russia’s Gazprom and Rosneft. Companies that pay their bosses fortunes – in 2014, BP’s CEO Bob Dudley got $12.7m, Shell’s Ben van Beurden made $24.2m and Exxon’s Rex Tillerson earned $33.1m. Companies that continue their activities unabated, exploring for new, ever dirtier sources of fossil fuels wherever they can find them from the Arctic and the Amazon to the Canadian tundra and our own Karoo. Eskom, Sasol, PetroSA and the indigenous coal industry fit right into this scheme.

It’s high time we put a stop to this industry that has been peddling in death and destruction on a horrific scale with impunity for far too long. One way of achieving this is to stop public funding of their activities to the tune of trillions of dollars every year and to make them pay for the havoc they cause instead.

- Andreas is a freelance writer with a PhD in geochemistry. Follow him on Twitter: @Andreas_Spath

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