Fossil Fuels Get $550 bn Christmas Present from Taxpayers

by Zachary Shahan.

Fossil fuels have dominated the global energy market and even the global economy for a long time. You would think that such mature industries wouldn’t need government subsidies — their annual revenue and profits are mind-boggling. However, with money comes power. And that money-power has a stranglehold on governments of the world such that it convinces governments to give them even more money in subsidies.

Another recent study comes to the conclusion that the total annual subsidies fossil fuel companies get from governments in the developed world comes to about half a trillion dollars. This follows a 2010 study from the International Energy Agency that found fossil fuel industries got $550 billion in annual subsidies.

It almost sounds like a joke — some of the richest companies in the world get $500 billion in government handouts. Just picture the rich, old, white men laughing their buns off about the way they have the most powerful governments in the world wrapped around their pinkie finger… or at least wrapped around the fingers that sign checks for our politicians’ election campaigns.

The latest study on this matter, Time to change the game, finds that the average resident of the world’s richest countries donates $112 a year to fossil fuel companies in the form of subsidies.

What are those subsidies for?

Well, as a press release about the new study notes, “these subsidies create perverse incentives favouring investment in carbon-intensive energy.” Yep, we’re encouraging the use of fossil fuels that harm our health, our climate, and our environment rather than using that money to transition away from these harmful sources and towards a truly clean energy economy.

The proposal from study author Shelagh Whitley is that G20 nations phase out fossil fuel subsidies completely by 2020. Whitley states:

The rules of the game are currently biased in favour of fossil fuels.

The status quo encourages energy companies to continue burning high-carbon fossil fuels and offers no incentive to change. We’re throwing money at policies that are only going to make the problem worse in the long run by locking us into dangerous climate change.

Here are just a few of the staggering statistics from Time to change the game:

  • The average subsidy provided by rich governments for every tonne of carbon is $7. This is the same as the current cost of carbon in the EU carbon trading system – meaning the carbon price may as well not exist.
  • Domestic subsidies in rich countries outstrip international climate finance provided to help address climate change in developing countries by a ratio of 7:1.
  • In some countries – India, Pakistan and Bangladesh – fossil fuel subsidies are more than double the level of spending on health services.
  • In countries such as Egypt, Pakistan, Morocco and Bangladesh, fossil fuel subsidies outweigh the national fiscal deficit.

Yep, you’ve got coal in your stocking, thanks to subsidies that have no place in a free market. Oddly, “free market idealists” never seem to complain about this matter.

Notably, G20 countries have agreed to phase out fossil fuel subsidies, with leadership on this matter actually coming from President Obama. An agreement made in September regarding the methodology for a new peer-review process of evaluating fossil fuel subsidies. This followed a 2009 agreement to phase out such subsidies. Obviously, though, they aren’t rushing through the process… 4 years and we’ve got an agreement on a peer-review process?

For more uplifting fossil fuel info, check out: Top 10 Toxic Ingredients Used In The Fossil Fuel Industries.

All images via the Overseas Development Institute

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This article, Fossil Fuels Get Half-A-Trillion-Dollar Christmas Present From Taxpayers, is syndicated from Clean Technica and is posted here with permission.

Who Are The Big 5 In The Carbon Trade?

Originally published on Shrink That Footprint by Lindsay Wilson

When we talk about a country’s carbon emissions we generally only consider those that occur within its borders. But where does the fuel for those emissions come from? And where do the products a country makes go?

In this second part of our series The Carbon Trade we look at who the big traders of carbon are. We’ll analyze the major importers and exporters of fuels and products and in doing so explain much of how carbon moves around the world, both before and after its combustion.

Image courtesy of Shrink That Footprint.
Image courtesy of Shrink That Footprint.

The Regions Fueling the World

In the first piece of this series, The Globalization of Carbon, we noted that in 2007 traded carbon totaled 17.6 Gt CO2, or 60% of total carbon emissions. More than half of this traded carbon was in the form of fuels, in particular oil and gas.

The big exporters of fuel carbon are those regions and countries that produce more fossil fuels than they use at home.

Image courtesy of Shrink That Footprint.
Image courtesy of Shrink That Footprint.

The big five fuel exporters are the Middle East, Russia, Sub-Saharan Africa, North Africa and Australia. Together these five regions export 63% of carbon in traded fuels.

Indeed they are each so rich in fossil fuels in the form of oil, natural gas and coal that each of them export more carbon in fuels than they create through combusting fuels within their borders.

Each tonne of oil, natural gas or coal that is exported by these regions is imported somewhere else. So let’s see where they go.

Living On Foreign Fuel

It is widely known that the US is dependent on foreign oil, so much so they banned crude exports back in the seventies oil shocks. But the US isn’t the only region living off fossil fuels from other regions.

This fact is plain to see when we look at who the big importers of carbon in fuels are.

Image courtesy of Shrink That Footprint.
Image courtesy of Shrink That Footprint.

When taken together the countries that make up Europe (EU27) import more carbon in the form of fuels than the US. These two regions are the big fuel importers followed by Japan, China and South Korea, based on 2007 data.

Together these five regions import a staggering 71% of all carbon traded as fuels.

China is the World’s Factory

Now that we have seen how carbon is traded before it’s combusted, it is worth looking a how it is embodied in the trade of products after its combustion. For clarity’s sake products in this case means both goods and services though the former dominates.

In the last two decades exports of Chinese made products have exploded, driven on by cheap labour, capital controls and government subsidies. This phenomenon is plain to see in the data for carbon in exported products.’

Image courtesy of Shrink That Footprint.
Image courtesy of Shrink That Footprint.

In 2007 the carbon embodied in China’s exports of goods and services totalled 1,556 Mt CO2. About the same as the exports of the United States, Europe and Russia combined.

Although these five regions accounted for a healthy 58% of the trade of carbon embodied in products it is as a general rule less centralized than is the case for fuels.

Europe and the US Buy the World’s Stuff

If China is the big exporter of carbon embodied in products it will surprise few that the US and Europe are the big buyers.

Image courtesy of Shrink That Footprint.
Image courtesy of Shrink That Footprint.

In 2007 there was 1,514 Mt of carbon dioxide emissions embodied in European imports of goods and services, a quarter of which came from China. The US was the other major importer, followed by Japan, China and the Middle East.

The fact that so much European and American consumption is supported by emissions that occur in other parts of the world highlights the perils of focusing solely on terrestrial emissions for climate policy. The increased outsourcing of carbon intensive production to regions with weaker climate regulation risks undermining the effectiveness of national climate policies.

Such risks also exist regarding carbon in fuels. If factors reducing terrestrial emissions result in increased exports of fuels this can undermine the effectiveness of national action. The more than doubling of US coal exports since 2006 in reaction to the shale boom is a good example of this.

Join us for the final post in the series tomorrow when we Mind the Carbon Gap between country’s extraction, production and consumption totals.

All the data used in this series is based on the recent, and freely downloadable, paper ‘Climate policy and dependence on traded carbon‘ by Robbie Andrew, Steven Davis and Glen Peters. Many thanks to Robbie in particular for providing the data.

This article, Who Are The Big 5 In The Carbon Trade?, is syndicated from Clean Technica and is posted here with permission.

US Uses 11 Times More Energy Than UK