Why are the G7 still Subsidising Fossil Fuels?

Most people probably do not realise that although the UK has committed to end fossil fuel & environmentally harmful subsidies by 2020, subsidies are continuing to be provided in the form of tax breaks for oil and gas exploration in the North Sea and in the decommissioning of oil.

Matthew Crighton, of Friends of the Earth Scotland recently said:

 “By providing financial support for the enormously wealthy oil and gas industry whilst giving crumbs to renewables, the UK government is backing the wrong technologies and drastically slowing the much-needed just transition to clean energy. They should convert subsidies to fossil fuel extraction into incentives for the fossil fuel industry to move rapidly to develop the energy supplies of the future, not to get locked into systems which we know we will have to abandon.”

Research has been done that shows that the world’s seven major industrial democracies spent at least 70 billion a year to prop up oil, gas and coal consumption at home and abroad in 2015 and 2016 despite their pledge to end fossil fuel subsidies by 2025.

Shelah Whitley, head of the climate and energy programme at the Overseas Development Institute (ODI) found that all G7 countries had increased their support for fossil fuel exploration since countries committed to limit global temperature rise “well below” two degrees under the Paris Agreement in 2015.

She added that the research done to track subsidies indicated that the UK was handing out subsidies and suggested this was a fact the UK government may be trying to “hide”. It would appear that they have created their own definition of subsidies and by refusing to take part in a peer review look suspicious.

Scientists have previously said that in order to prevent dangerous global warming of more than two degrees, 80% of global coal reserves, 50% of all gas reserves and more than a third of the world’s oil had to stay in the ground.

It is important to understand that these fossil fuel subsidies are not necessary. Fossil fuels do not need to be subsidised. Today, these subsidies line the pockets of the fossil fuel companies at the expense of the taxpayer.

Often criticised unfairly as financial burdens, wind and solar power contribute much more to society than they are given credit for. For example, wind power contributes positively to the US economy with an annual economic impact of about $20 billion on their economy.

It is now the case that new wind and solar can cost less than new fossil fuel power plants, even without subsidies. But the more a country’s solar and wind companies can get ahead, the better they fare in quickly transforming global energy economy.

The long-term trend is becoming clearer and some media outlets have spoken of a coming time when coal simply is no longer used. Solar power that was once so costly will become cheap enough to push coal and even natural gas plants out of business faster than was previously forecast.

There are other specific costs renewable energy critics don’t point out because their position would crumble very quickly. It has been reported that 52,000 premature deaths are caused in the US each year by power plant emissions. In the EU, the number of premature deaths every year from coal dust was estimated to be 22,900.

The question should be asked as to why countries continue to subsidise industries that don’t offer long-term economic growth for a country through innovation and improvement?