30 January 2012

Cutting Climate Change is Simple: Just Stop Subsidising Fossil Fuels

I knew that this was true but I didn’t realise the effect was so great. The simple way to cut climate change is to stop subsidising fossil fuels

Tim Worstall | Forbes | 29 January 2012

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 hand brake 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.”

The thing is though we cannot just pass a law in Europe or the US and ban these subsidies. For it’s not actually Europe or the US which pays these subsidies. It’s largely oil producing and developing countries that do provide the subsidies. Iran, Russia, China, Nigeria, these sorts of places.

Things are getting better, slowly, this is true. Iran has begun to overhaul their subsidies (and they are by far the largest) by replacing below market price gas and petrol with cash grants to poor families. Nigeria shows how difficult it can be though: the government just last week backed off from a removal of petrol subsidies in the face of a general strike.

But even given those difficulties this is good news, isn’t it? Half of the action required to stave off the generally agreed level of dangerous climate change is simply to get governments to stop wasting the taxpayers’ money on unsuitable subsidies. Even with difficulties such as those in Nigeria, this is bound to be a lot easier than trying to change the way our entire economies work, isn’t it?

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