The UK-based research Institute ODI and US-based organisation Oil Change International have, this month, published a report described in the Guardian as “the most detailed breakdown yet of global fossil fuel subsidies” titled The fossil fuel bailout: G20 subsidies for oil, gas and coal exploration. Drawing on primary data from the International Energy Agency, and in conjunction with some of the leading international experts on fossil fuel subsidies, the report focuses on a particular category of fossil fuel subsidies which I discussed in a previous post – exploration subsidies – described by the authors as marrying “bad economics with potentially disastrous consequences for climate change”.
The key point of the report is that despite the 2009 commitment by G20 member states to phase out “inefficient” fossil fuel subsidies, subsidies have, in a number of key member states including the US, Australia, Russia and UK increased significantly, amounting to an estimated $88 B annually on exploration subsidies.
The authors note that exploration subsidies represent a ‘triple-lose’ scenario: they direct large volumes of finance into high-carbon assets not able to be exploited without major impacts on climate change; they activate investment away from renewables and undermine the prospects of reaching an agreement in Paris in 2015 that will avoid global average temperature increases above 2°C.
OCI’s Steve Kretzmann (who I spoke with in Warsaw in November of last year and who was particularly critical of New Zealand’s stance on production subsidies) discusses the new report briefly on BBC’s World Service here. Useful articles on the report have also appeared on the World Economic Forum website, New Republic and Grist.