January 19, 2012
Governments Spend $1.4 Billion Per Day to Destabilize
Climate
Lester R. Brown
We distort reality when we omit the health and environmental
costs associated with burning fossil fuels from their prices. When
governments actually subsidize their use, they take the distortion
even further. Worldwide, direct fossil fuel subsidies added up to
roughly $500 billion in 2010. Of this, supports on the production
side totaled some $100 billion. Supports for consumption exceeded
$400 billion, with $193 billion for oil, $91 billion for natural
gas, $3 billion for coal, and $122 billion spent subsidizing the use
of fossil fuel-generated electricity. All together, governments are
shelling out nearly $1.4 billion per day to further destabilize the
earth’s climate.
The government of Iran spent the most on promoting fossil fuel
consumption in 2010, doling out $81 billion in subsidies. This
equaled more than 20 percent of the country’s gross domestic
product. Saudi Arabia was a distant second at $44 billion. Rounding
out the top five were Russia ($39 billion), India ($22 billion), and
China ($21 billion).
Kuwait’s fossil fuel subsidies were highest on a per capita
basis, with $2,800 spent per person. The United Arab Emirates and
Qatar followed, each spending close to $2,500 per person.
Carbon emissions could be cut in scores of countries by simply
eliminating fossil fuel subsidies. Some countries are already doing
this. Belgium, France, and Japan have phased out all subsidies for
coal, for example. As oil prices have climbed, a number of countries
that held fuel prices well below world market prices have greatly
reduced or eliminated their motor fuel subsidies because of the
heavy fiscal cost. Among those reducing subsidies are China and
Indonesia. Even Iran, which was pricing gasoline at one fifth its
market price, dramatically reduced its gasoline subsidies in
December 2010 as part of broader energy subsidy reforms.
In contrast to the $500 billion in fossil fuel supports in 2010,
renewable energy received just $66 billion in subsidies—two thirds
for electricity generation from wind, biomass, and other sources,
and one third for biofuels. Not only do fossil fuel subsidies dwarf
those for renewables today, but a long legacy of governments
propping up oil, coal, and natural gas has resulted in a very uneven
energy playing field.
A world facing economically disruptive climate change can no longer
justify subsidies to expand the burning of coal and oil. The
International Energy Agency
projects that
a phaseout of oil consumption subsidies by 2020 would cut oil use by
3.7 million barrels per day in that year. Eliminating all fossil
fuel consumption subsidies by 2020 would cut global carbon emissions
by nearly 5 percent while reducing government debt. Shifting
subsidies to the development of climate-benign energy sources such
as wind, solar, and geothermal power will help stabilize the earth’s
climate.
This data highlight is adapted from
World on
the Edge by Lester R. Brown. For more
data and discussion, see the full book at
www.earth-policy.org.
Copyright © 2012 Earth Policy Institute