By Evolution Solar Sunshine Coast
A report by the Earth Policy Institute (EPI) has shown that globally, governments have spent over $620 billion on fossil fuel subsidies. The conservative figure includes around $100 billion for productions and $523 for consumption. In contrast, only $88 billion was spent on renewable energy subsidies.
These exorbitant costs are 20% higher than those of 2010 – mainly because of higher world oil prices. The report has also claimed the figures (obtained from data gathered from the International Energy Agency’s Fossil Fuel Subsidy Database) are very conservative. They do not include other tax cuts or the years of government funded infrastructures or research and development.
$88 billion was spent on renewable energies, almost equally divided between solar pv, wind, biomass electricity and biofuels such as has ethanol and biodiesel. As per the following chart by the EPI, the $523 billion spent on consumption was divided up between $285 billion on oil, $131 billion on electricity, $104 billion on natural gas and $3 billion on coal.
As a result, the report states that governments around the world are cutting the prices that people pay for the dirtiest fossil fuel energy by almost a quarter therefore encouraging waste and hindering efforts to stabilize climate change. The International Energy Agency (IEA) says the phase out of these subsidies will save around 2 gigatonnes of carbon dioxide emissions – the equivalent of taking 350 million cars off the road.
In 2009 G-20 countries committed to a phase out of “inefficient fossil fuel subsidies that encourage wasteful consumption.” However, little assessable ground has been attained.
March is also the anniversary of Big Oil Subsidies being written in the Tax Code. The Revenue Act of 1913 saw oil companies allowed to write off 5% of costs from oil and gas wells with the percentage allowed increasing when prices are high. Now, companies are allowed to deduct 15% of costs with only very large companies not eligible for the cut. Ronald Raegan and more recently, President Obama, have campaigned to change this law with little to no avail thus far.
Dirty fossil fuels are given these huge subsidies when the big five oil companies, Royal Dutch Shell, BP, Chevron, ConocoPhilips and ExxonMobile, showed a record 137 billion dollars profit in 2012.
As the report states, “Clearly the deck is stacked against renewables.”