A recent Editorial Board article by Bloomberg labelled fossil fuel subsidies as the world’s dumbest policy ever. The delay by G20 leaders in eliminating fossil fuels goes beyond any form of logic or rationale. It’s quite frankly beyond comprehension. The G20 consists of 20 of the largest economies in the world — 19 countries and the EU.
Credit: DeSmog Canada.
Dumbest Policy Of Our Times
Einstein’s quote about insanity is much overused and frankly getting a little boring but nowhere does it apply better than with the open-ended financial support of the oil-gas-coal sector.
Insanity is doing the same thing over and over again and expecting different results. (Einstein).
So let’s break this down. The G20 leaders and the rest of the world (195 countries in total) signed the Paris Agreement in December of 2015. Under the agreement, governments are obligated to implement domestic measures to meet their emissions-reduction targets (Intended Nationally Determined Contributions – INDC).
Canada committed to reducing its emissions by 30 percent below 2005 levels by 2030. The US target is 28% by 2025 whereas the EU contribution is 40% by 2030 below 1990 levels.
Just to be perfectly clear. Parties to the Paris Agreement have agreed to and committed to reducing greenhouse gas emissions, predominantly carbon emissions. They have agreed to different results. In spite of that, we continue to subsidize fossil fuel companies for the production of fossil fuels and for the exploration for new reserves — doing the same thing.
The world needs to reduce emissions but we are subsidizing the production of more emissions. We need less but our tax dollars are paying for more. I cannot think of any other government action where less is needed but more is encouraged. That would be like trying to reduce crime by loosening the laws that control it.
Our governments continue to subsidize fossil fuels, the very source of the problem that has gotten us in this predicament in the first place. While the Paris Agreement is intended to reduce emissions, we press on with fossil fuel subsidies. This is by far the dumbest policy of our times.
At its latest meeting, the G20 only went so far as to “reaffirm our commitment to rationalise and phase-out inefficient fossil fuel subsidies .…We … look forward to further progress in the future,” the G20 said.
This recent reaffirmation follows a previous commitment in 2009 to end fossil fuel subsidies. Now seven years later, there is nothing to show for it.
In referring to subsidies as “ridiculous outlays”, the Bloomberg piece further said:
They fuel corruption, discourage efficient use of energy and promote needlessly capital-intensive industries.
They sustain unviable fossil-fuel producers, hold back innovation, and encourage countries to build uneconomic pipelines and coal-fired power plants.
Last and most important, if governments are to have any hope of meeting their ambitious climate targets, they need to stop paying people to use and produce fossil fuels.
Sums Involved Are Enormous
The International Energy Agency reports that fossil fuel subsidies amount to $493 billion for consumption subsidies in 2014. The UK Overseas Development Institute estimates that G20 countries alone paid out $450 billion as producer subsidies during the same year. A third body — the International Monetary Fund — includes unpaid climate and environmental externality costs in its fossil fuel subsidy estimates. The IMF places fossil fuel subsidies at greater than $5 trillion. This is a whopping $10 million per minute. Every hour. Every day.