Global Fossil Fuel Subsidies At Record Highs

Originally published on DeSmogBlog by Ben Jervey.

Global Fossil Fuel Energy Consumption
Global Fossil Fuel Energy Consumption

The exact worth of massive global fossil fuel subsidies is incredibly hard to figure. There’s no real consistency in the definitions of subsidies, or how they should be calculated. As a result, estimates of global subsidy support for fossil fuels vary widely.

According to a new analysis by the Worldwatch Institute, these estimates range from $523 billion to over $1.9 trillion, depending on what is considered a “subsidy” and how exactly they are tallied.

Worldwatch Institute research fellow Philipp Tagwerker, who authored the brief, explains:

The lack of a clear definition of “subsidy” makes it hard to compare the different methods used to value support for fossil fuels, but the varying approaches nevertheless illustrate global trends. Fossil fuel subsidies declined in 2009, increased in 2010, and then in 2011 reached almost the same level as in 2008. The decrease in subsidies was due almost entirely to fluctuations in fuel prices rather than to policy changes.

In other words, though the estimates vary widely, they all agree that fossil fuel subsidies are back up to the record levels they were at in 2008, before the financial crisis caused a temporary dip. So while world leaders, including President Obama, talk about ending subsidies that benefit one of the world’s richest industries, there hasn’t been any actual reduction.

Why such difficulty calculating the subsidies? For starters, subsidies typically fall into two broadly different categories: production subsidies and consumption subsidies. Production subsidies are what you think of when you hear about special tax rates for oil companies or grants or loan guarantees to “clean coal” projects. Basically, they include anything that lowers the cost of energy production — through tax advantages, loan assistance, grants, or anything else.

Consumption subsidies refer to any financial mechanisms that lower the cost of energy for the end consumers. Think of the artificially low gasoline prices in Venezuela, or even something such as tax breaks for home heating fuel.

According to Tagwerker, production subsidies are most common in wealthier, industrialized countries, while consumption subsidies are more common in developing countries with populations struggling to afford fossil fuels.

The $523 billion number above — standing as the bottom boundary of the range of global fossil fuel subsidies — represents only the consumption subsidies for coal, electricity, oil and, natural gas in 38 developing countries, as estimated by the International Energy Agency (IEA). It doesn’t include any production subsidies at all.

Production subsidies are often quoted at $100 billion a year, a number that comes from a June 2010 report to the G-20 leaders from the Organisation for Economic Co-operation and Development (OECD), the IEA, the World Bank, and the Organization of the Petroleum Exporting Countries (OPEC). But that doesn’t include so-called “support measures” like:

  • export credit agencies (estimated at $50-100 billion annually)
  • cost of securing fossil fuel shipping routes (estimated at $20-500 billion/year)

Then there’s the issue of externalities. Tagwerker argues that external costs — like those associated with resource scarcity, environmental degradation, and human health — should be considered in subsidy calculations, as their absence artificially lowers the true cost of fossil fuel energy.

“Without factoring in such considerations, renewable subsidies cost between 1.7¢ and 15¢ per kilowatt-hour (kWh), higher than the estimated 0.1–0.7¢ per kWh for fossil fuels,” writes Tagwerker. “If externalities were included, however, estimates indicate fossil fuels would cost 23.8¢ more per kWh, while renewables would cost around 0.5¢ more per kWh.”

A recent report by the International Monetary Fund (IMF) took a unique approach to subsidy calculations, lumping them into pre-tax and post-tax groupings rather than production and consumption.

The IMF then tacked on a modest $25-per-ton carbon tax to capture the external costs of climate pollution. After tallying up all the various subsidies, the IMF came up with a whopping $1.9 trillion every year, or roughly 2.5-percent of the global GDP in 2012.

Finally, Tagwerker considers the entire subsidy through the lens of climate pollution. “From an emissions perspective, 15 percent of global carbon dioxide emissions receive $110 per ton in support, while only 8 percent are subject to a carbon price, effectively nullifying carbon market contributions as a measure to reduce emissions.”

Image Credit: Subsidies via Shutterstock.

This article, Fossil Fuel Subsidies Are Back Up To 2008 Levels, is syndicated from Clean Technica and is posted here with permission.

About the Author

The DeSmogBlog ProjectDeSmog Blog The DeSmogBlog Project began in January 2006 and quickly became the world’s number one source for accurate, fact based information regarding global warming misinformation campaigns. TIME Magazine named DeSmogBlog in its “25 Best Blogs of 2011” list. Our articles and stories are routinely highlighted in the world’s most popular news outlets and blogs: New York Times DotEarth, Huffington Post, Daily Kos, ThinkProgress, and Treehugger, to name a few. DeSmogBlog has won the Canadian Public Relation Society’s Leadership in Communication award, and was voted Canada’s “Best Group Blog” by their peers.

Energy Efficiency Is The World’s Most Important ‘Fuel’ IEA Says In New Report

by Nathan

IEA report
Thermal heat-loss in residential building. Image Credit: Cambridge Carbon Institute

Energy efficiency is the world’s most important “fuel” according to a new report from the International Energy Agency (IEA). Investments in energy efficiency provide such massive savings that the energy saved actually completely eclipses the energy generated by most forms of generation. This “first fuel” is incredibly important to the world’s efforts to reduce fossil fuel use and carbon emissions and should be focused on even more, the new report argues.

The Energy Efficiency Market Report, as its known, states that “the scale of recent investment in energy efficiency worldwide makes it as significant in its contribution to energy demand as investment in renewable energy or fossil fuel generation.”

Energy Efficiency
No matter how “green” the energy being produced, ‘conservation’ beats renewable energy every time. Every streetlight that is turned “off” uses no energy at all — even clean, renewable energy can’t beat that stat.

“Energy efficiency has been called a ‘hidden fuel’, yet it is hiding in plain sight,” stated IEA executive director Maria van der Hoeven. “Indeed, the degree of global investment in energy efficiency and the resulting energy savings are so massive that they beg the following question: is energy efficiency not just a hidden fuel but rather the world’s first fuel?”

The report notes that, worldwide, in 2011, energy efficiency schemes attracted about $300 billion in investment funds — which puts it on about the same level as global investments in fossil-fuel power generation or renewable energy.

PV-Tech provides more:

Between 2005 and 2010, the IEA calculated that energy efficiency measures across 11 of its member countries (Australia, Denmark, Finland, France, Germany, Italy, Japan, the Netherlands, Sweden, the United Kingdom and the United States) saved the energy equivalent of US$420 billion worth of oil.

In these same countries, the IEA said that were it not for energy efficiency measures implemented in the past three years, consumers would be using and paying for two-thirds more energy than is the case. Overall, in 2010 energy savings from efficiency measures exceeded the output from any other single fuel source in these same countries, with the 11 IEA countries avoiding burning 1.5 billion tonnes of oil equivalent thanks to efficiency improvements developed since 1974.

The report notes that the driving force behind this huge increase in energy efficiency investment and adoption is, simultaneously, the implementation of effective policies and the rising price of energy, especially oil. With the price of fossil fuels rising, there really isn’t much choice for many governments/businesses/individuals but to be more energy efficient.

Brian Smithers, the strategic director for Northern Europe at the UK-based renewable energy products and services distributor Rexel, states:

It’s about time the role of energy efficiency was recognized on a global scale, so it’s great to see the IEA placing it alongside traditional as well as renewable fuels. However, if we are to shift the perception of energy efficiency from a ‘hidden fuel’ to the world’s ‘first fuel’ we need to invest in education.

In the UK, for example, there is a huge lack of awareness around energy efficiency, which is seriously hampering our progress against carbon reduction targets. To put it simply, to meet the UK’s carbon reduction targets by 2050, we need to improve one home every minute, equating to 26 million refurbished energy-efficient homes by 2050.

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This article, Energy Efficiency Is The World’s Most Important “Fuel,” IEA Says In New Report, is syndicated from Clean Technica and is posted here with permission.

About the Author

For the fate of the sons of men and the fate of beasts is the same; as one dies, so dies the other. They all have the same breath, and man has no advantage over the beasts; for all is vanity. – Ecclesiastes 3:19

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About the Author

For the fate of the sons of men and the fate of beasts is the same; as one dies, so dies the other. They all have the same breath, and man has no advantage over the beasts; for all is vanity. – Ecclesiastes 3:19

IEA: Renewables Will Exceed Natural Gas And Nuclear By 2016

by Silvio Marcacci

Global renewable electricity production by region image -  IEA
Global renewable electricity production by region image — IEA

Natural gas is widely considered the bridge to take us from fossil fuel dependence to a clean energy future – but that bridge may be a lot shorter than anyone could have predicted.

The International Energy Agency (IEA) predicts power generation from renewable sources will exceed natural gas and be twice the contribution from nuclear energy globally by 2016 – just three short years from now.

IEA’s second-annual Medium-Term Renewable Energy Market Report (MTRMR) forecasts renewable generation will grow 40% in the next five years despite difficult economic conditions.

Wind And Solar Power The Renewables Charge

Renewable energy is now the fastest-growing sector of the global power market, and will represent 25% of all energy generation worldwide by 2018, up from 20% in 2011. In addition, renewable electricity generation is expected to reach 6,850 terawatt-hours (TWh) and total installed renewable capacity should hit 2,350 gigawatts (GW), both by 2018.

Wind and solar photovoltaic generation is powering this jump, and non-hydro renewable power will double from 4% of gross generation in 2011 to 8% in 2018. IEA cites two main drivers for their incredible outlook: accelerating investment and deployment, and growing cost competitiveness versus fossil fuels.

Strongest Growth In Developing Countries

Even though government funding has been inconsistent, private investment has remained strong, especially in developing economies. Rural electrification, energy poverty, and rising demand have been major challenges for policymakers in these countries, and renewables have become an increasingly attractive option for diverse and non-polluting power.

Countries above 100MW non-hydro renewable capacity
Countries with non-hydro renewable capacity above 100MW image via IEA

Non-developed countries, led by China, are expected to contribute two-thirds of all renewable market growth between now and 2018, compensating for slower growth and market volatility across Europe and the US.

Indeed, non-hydro renewable power will make up 11% of gross generation in these countries by 2018, up from 7% in 2012. By itself, China will account for 310GW, or 40% of all global renewable power capacity increases over this time period.

Falling Costs, Rising Capacity

Solving energy poverty issues without harmful emissions is key to renewables growth, but the larger reason for IEA’s outlook is more likely falling costs. The report finds renewables now cost-competitive with fossil fuels across many countries and a wide set of circumstances.

Solar PV capacity additions
Solar PV annual capacity additions by region image via IEA

IEA notes wind is competitive with new fossil fuel in multiple markets, including Brazil, South Africa, Mexico, and New Zealand, and solar is competitive both in markets with high peak prices and decentralized power needs.

“As their costs continue to fall, renewable power sources are increasingly standing on their own merits versus new fossil-fuel generation,” said Maria van der Hoeven of IEA.

IEA – Policy Uncertainty Is Public Enemy #1

However, the IEA warns renewables still face a challenging future. Global investment fell in 2012, and policy uncertainties loom over clean energy technology in several important markets. In addition, grid integration challenges have materialized in some regions as renewables penetration has hit new levels.

“Policy uncertainty is public enemy number one,” said Van der Hoeven. “Many renewables no longer require high economic incentives, but they do still need long-term policies that provide a predictable and reliable market and regulatory framework.”

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This article, IEA: Renewables Will Exceed Natural Gas And Nuclear By 2016, is syndicated from Clean Technica and is posted here with permission.

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About the Author

Silvio Marcacci Silvio is Principal at Marcacci Communications, a full-service clean energy and climate-focused public relations company based in Washington, D.C.

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America’s Updated Energy Strategy

by John Brian Shannon

President Obama visited the Argonne National Laboratory today in Argonne, Illinois, to give a major speech on the future of American energy. A new, USD $2 billion dollar program called the energy security trust was announced which gives focus to the administration’s plans for more renewable energy and proposes lower subsidies for fossil fuels.

Much of the resulting policy statement is based upon information supplied to the administration by the nonpartisan, Securing America’s Future Energy (SAFE) which represents senior business and former military leaders on both ends of the American political spectrum.

Here are the main points of the energy security trust – more detailed information is available by clicking here and here. And you can read the transcript of the President’s speech today in Argonne, Illinois, as compiled by the Chicago Sun-Times here.

By 2020, the President and Energy Secretary Steven Chu want the US;

  • To double the present level of U.S. renewable electricity generation
  • To double American energy productivity (by 2030)
  • To cut energy waste in the U.S. by half over the next twenty years
  • To invest in technology promoting energy efficiency & reduced waste
  • To cut net oil imports in half by the end of the decade
  • To enable safer production & cleaner electricity from natural gas
  • To promote safe & responsible oil and natural gas development
  • To assist the Nation’s truck fleets to adopt natural gas & alternative fuels
  • To improve energy efficiency through the Better Buildings Challenge program
  • To help U.S. states cut energy waste, improve efficiency & modernize grids
  • To streamline Interior Department regulations for faster project permitting
  • To work with the G20 & other fora to phase-out fossil fuel subsidies worldwide
  • To work with the IEA & others to strengthen energy security
  • To promote energy efficiency & development & deployment of clean energy via Clean Energy Ministerial & other international fora
  • To promote safe & secure nuclear power in nations pursuing nuclear energy
  • To design a responsible nuclear waste strategy for the U.S.

As the President continues to pursue his ‘all-of-the-above’ energy strategy, it should be noted that significant progress has been made. As President Obama stated in his speech today,

“We produce more oil than we have in 15 years. We import less oil than we have in 20 years. We’ve doubled the amount of renewable energy that we generate from sources like wind and solar. We have tens of thousands of good jobs to show for it.

We’re producing more natural gas than we ever have before with hundreds of thousands of good jobs to show for it. We supported the first new nuclear power plant in America since the 1970’s. And we’re sending less carbon pollution into the environment than we have in nearly 20 years. So we’re making real progress across the board.” – President Barack Obama

All of this is adding up to huge changes in the American energy sector and for the producers, consumers and investors of energy, the energy map in 2020 will bear scant resemblance to our present-day energy model. And that means that seven years from now, the air in and around large U.S. cities will be the cleaner for it.

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JOHN BRIAN SHANNON

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President Obama: Restoring the Dream

by John Brian Shannon

President Obama advertised that he would bring “Hope and Change” to the U.S.A. when he campaigned for president first time around and he did, in fact, bring about momentous change during his first term.

I know this, because in my area of specialty — earth-shaking change has occurred. Change that by some accounts, was too much to hope for in an entire lifetime!

Sometime after his 2009 inauguration, the 44th President of the United States laid out his (then-controversial) positions on energy, energy security and sustainable energy as they related to the United States.

In fact, he wrote me a letter back in March 2012 outlining his energy plans. It is a profound document and is available at: johnbrianshannon.com

At the time, these seemed like grand but unreachable goals. But not now — less than a year later! In hindsight, it is now obvious that President Obama had a strong, overriding vision of a self-sufficient and energy-secure America. For an overview, visit: The Biggest Energy Story of 2012

It is also enlightening to read the Reuters report on what the IEA has said about President Obama’s startlingly successful energy, energy security and sustainable energy policies: U.S. to overtake Saudi as top oil producer: IEA

“(Reuters) – The United States will overtake Saudi Arabia and Russia as the world’s top oil producer by 2017, the West’s energy agency said on Monday, predicting Washington will come very close to achieving a previously unthinkable energy self-sufficiency.” (Reuters excerpt)

President Obama promised positive change in America’s energy future — and he delivered unprecedented positive change! Energy industry experts are still reeling.

Which gives me hope.

Hope that with some cooperation from U.S. politicians and from America’s allies, this President and his administration can overcome the economic damage that has threatened the ongoing success story that is our Western society.

How to do that over the long term? And how to do it without throwing billions of dollars at temporary solutions and then ending up in a similar position 10 or 15 years later.

Many Americans and America’s well-wishers around the globe are unhappy with increasing inequality in the U.S.

Initially the U.S. became great on account of the opportunities to citizens (first) and immigrants (second) and its trading partners around the world (third). What built America was the hopes and aspirations of several generations who saw the opportunities offered to those who worked smart and hard, and who also invested their time and resources well.

Millions of people were self-incentivized to be productive, to contribute to the betterment of the nation and to add value to their lives and to their communities. Having the opportunity to succeed — allowed and created all of the success that citizens and trading partners of the U.S.A. have enjoyed over the past hundred years or more.

For those who can be honest about it, those opportunities have dissipated alarmingly in recent decades.

Rarely can one finish their education, begin a career at one level and years later, finish their career as a CEO or owner of a large and prosperous business. People have little upward mobility and for those born into poverty situations, the vast majority of them continue to live in poverty until they pass out of this world — no matter how great their work ethic.

This has been well-documented elsewhere, so I won’t go on about it at length here.

But if anything is going to help restore citizens faith in the American dream, and restore the faith well-wishers of the United States around the world, it will be a healthier and better-educated American society.

One of the best ways to improve peoples economic standing, (according the the UN and other organizations expert in governance and human development) are by society-wide improvements to health and education.

It needn’t cost a trillion dollars — but it does need direction.

The same sort of direction that President Obama used to take his country from a nation perilously addicted to foreign oil and turn it into an net exporter of oil and gas — in the process making it an almost energy self-sufficient nation and a nation on the forefront of sustainable energy worldwide. All accomplished during a time of unprecedented worldwide economic upheaval. By any standard, a monumental accomplishment! Congratulations are in order, Mr. President.

So, where are we now and what could we hope for?

  • An energy-secure America. Done. Check.
  • A uniformly healthy America. In progress, gaining momentum.
  • A uniform minimum education of ‘one-college-level-degree’ or ‘one-vocational-certification’  for all Americans. Let’s hope.

If this President’s first term accomplishments are remembered as making America energy secure combined with a well-begun universal health-care plan — then let us hope that his second term will be remembered by a “Done. Check.” on a uniformly healthy society and a college or vocational education plan for all American citizens — so that all citizens can become part of America’s overall economic success.

Good health, a good education and plenty of career opportunities for citizens, will thereby and effectively remove present inequality, restore the hope of opportunity for success to the American people and improve the nations economic health. These are not new ideas. These have worked before, and profoundly, are what made America great from its beginning.

Let’s restore the American Dream, but this time let it be a Sustainable American Dream and one that will work for all U.S. citizens — not just the wealthy.

JOHN BRIAN SHANNON

To follow John Brian Shannon on social media – place a check-mark beside your choice of Facebook, Twitter or LinkedIn: FullyFollowMe/johnbrianshannon