Saturday, November 21, 2015

This map shows which countries are squandering the most money on fossil fuel subsidies

This map shows which coun0tries are squandering the most money on fossil fuel subsidies (Credit: Grist / CartoDB)  Click to Enlarge.
In September of 2009, leaders from the Group of 20 gathered in Pittsburgh and collectively pledged to phase out fossil fuel subsidies.  It was viewed as a win for the climate in the run-up to the Copenhagen climate talks later that year.  Today, as another round of U.N. climate negotiations approaches, Grist is pleased to report that G20 member countries … still subsidize oil, gas, and coal production.  And not just a little.  Altogether, the G20 spends $452 billion annually on these subsidies, according to a new report by the Overseas Development Institute (ODI) and Oil Change International (OCI).

Composed of 19 major economies and the E.U., the G20 accounts for roughly three-quarters of global emissions.  What these countries choose to subsidize matters. And the half-trillion figure above is probably lowballing it, because the ODI/OCI report doesn’t cover the European Union.  The U.S., for its part, still spends upwards of $20 billion annually subsidizing fossil fuel production.  Globally, report the authors, about half of all fossil subsidies go to upstream oil and gas sectors (i.e. prospecting and drilling).

A fossil fuel subsidy can take roughly one of three forms.  The first is what you’re probably already thinking of:  things like direct spending or tax breaks granted by governments to fossil fuel producers.  But these national subsidies aren’t the only way to prop up a sector.  If you’re a country with state-owned enterprises (SOEs) operating in the energy sector, you can also just invest in fossil fuel production directly through these companies.  That’s the name of the game in places like China and Saudi Arabia, which own Sinopec and the brilliantly named Saudi Aramco, respectively.  Third, there’s the slightly sneakier subsidy realm of public finance, in which majority state-owned banks and other financial institutions offer loans, grants, or equity financing to domestic (or international!) fossil fuel projects.  These loans may or may not wind their way through multilateral institutions like the World Bank.  (And these factors don’t account for consumption subsidies or the many indirect subsidies, like building roads for gas-powered cars to drive on and going to war to protect oil supply chains in the Middle East.)

All of these subsidies keep fossil fuel prices artificially low, which leads to more CO2 emissions than the market should support and to difficulties for a renewable energy sector that’s attempting to become competitive.

This map shows which countries are squandering the most money on fossil fuel subsidies

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