EU

The OECD is renewing its calls to end fossil fuel subsidies should end in a statement yesterday to help cut greenhouse gas emissions and combat global warming.

The move, which was mooted by the OECD at the G20 Summit in Pittsburgh last September, could cut emissions 10% by 2050 and save governments billions – an attractive option when so many are trying to reduce budget deficits in the wake of the global recession.

In emerging and developing countries, fossil fuel subsidies were worth around $557 billion in 2008, while figures for developed countries are harder to come by but could be as much as $100 billion a year, according the International Energy Agency (IEA).

A new report from the IEA says that the subsidies, which have increased markedly since 2007, are leading to higher levels of consumption that would occur otherwise.

Phasing out subsidies would give an incentive to using energy more efficiency, says the IEA, and drive a switch from fossil fuels to alternative fuels that emit less greenhouse gases.

The result could be a 5.8% reduction on global energy demand by 2020 and a cut in CO₂ emissions of 6.9% – equivalent to the combined current emissions of France, Germany, Italy, Spain and the UK.

“Many governments are giving subsidies to fossil fuel production and consumption that encourage greenhouse gas emissions, at the same time as they are spending on projects to promote clean energy,” says Angel Gurría, OECD Secretary-General. “This is a wasteful use of scarce budget resources.”

For further information:
www.oecd.org/g20/fossilfuelsubsidies
www.iea.org/
www.iea.org/files/energy_subsidies.pdf

Related stories:
Global CO₂ emissions from fossil fuels up 29% since 2000 (18-Nov 2009)
Global investment of $10.5 trillion in low-carbon technology needed, says IEA (11-Nov 2009)
G20 leaders to phase out fossil fuel subsidies (28-Sept 2009)