Britain is "shooting itself in the foot" by subsidising its coal, oil and gas industries by $4.2bn (£2.6bn) a year even as government reviews the "green levies" on energy bills which support energy efficiency and renewable power, according to a report published on Thursday.
The figures from the Overseas Development Institute suggest that Britain is now the world's fifth largest subsidiser of fossil fuels after the US, Russia, Australia and Germany despite commitments to cut carbon emissions and reduce "perverse" fossil fuel subsidies.
In 2011, the latest year for which data is available, Britain gave tax breaks of £280m to oil and gas producers and reduced VAT on fossil fuels by several billion pounds, says the thinktank's report.
Rich countries have committed to phase out "inefficient" fossil fuel subsidies but the ODI figures, drawn from the International energy agency, OECD and other sources, suggest global subsidies to fossil fuel producers totalled $523bn a year in 2011 – dwarfing subsidies to renewable energies.
For every $1 spent to support renewable energy, another $6 were spent on fossil fuel subsidies, says the report.
"They are subsidising the very activities that are pushing the world towards dangerous climate change, and creating barriers to investment in low-carbon development and subsidy incentives that encourage investment in carbon-intensive energy," says the report's author Shelagh Whitley.
"In effect, each of the 11.6bn tonnes of carbon emitted from the top 11 developed countries comes with an average subsidy of $7 a tonne – around $112 for every adult," she said.
The figures have been released as ministers prepare to go to Poland for the deadlocked UN climate talks and as uncertainty surrounds the future of government-mandated levies on energy bills that support fuel poverty schemes and renewable energy.
G20 governments accepted in 2009 that fossil fuel subsidies encourage wasteful consumption, reduce energy security, and undermine efforts to deal with the threat of climate change.
But the report suggests that special interest groups have hindered their elimination and little has changed. "The rules of the game are currently biased in favour of fossil fuels.
The status quo encourages energy companies to continue burning high-carbon fossil fuels and offers no incentive to change. We're throwing money at policies that are only going to make the problem worse in the long run by locking us into dangerous climate change," said Whitley.
The report said: "Investors are being sent the wrong signals on two fronts as carbon prices decline and fossil fuel subsidies increase." The report argues that fossil fuel subsidies also fail in one of their core stated objectives, which is to to benefit the poorest.
"Phasing out fossil fuel subsidies would create a win-win scenario. It would eliminate the perverse incentives that drive up carbon emissions, create price signals for investment in a low-carbon transition and reduce pressure on public finances."
theguardian.com
The figures from the Overseas Development Institute suggest that Britain is now the world's fifth largest subsidiser of fossil fuels after the US, Russia, Australia and Germany despite commitments to cut carbon emissions and reduce "perverse" fossil fuel subsidies.
In 2011, the latest year for which data is available, Britain gave tax breaks of £280m to oil and gas producers and reduced VAT on fossil fuels by several billion pounds, says the thinktank's report.
Rich countries have committed to phase out "inefficient" fossil fuel subsidies but the ODI figures, drawn from the International energy agency, OECD and other sources, suggest global subsidies to fossil fuel producers totalled $523bn a year in 2011 – dwarfing subsidies to renewable energies.
For every $1 spent to support renewable energy, another $6 were spent on fossil fuel subsidies, says the report.
"They are subsidising the very activities that are pushing the world towards dangerous climate change, and creating barriers to investment in low-carbon development and subsidy incentives that encourage investment in carbon-intensive energy," says the report's author Shelagh Whitley.
"In effect, each of the 11.6bn tonnes of carbon emitted from the top 11 developed countries comes with an average subsidy of $7 a tonne – around $112 for every adult," she said.
The figures have been released as ministers prepare to go to Poland for the deadlocked UN climate talks and as uncertainty surrounds the future of government-mandated levies on energy bills that support fuel poverty schemes and renewable energy.
G20 governments accepted in 2009 that fossil fuel subsidies encourage wasteful consumption, reduce energy security, and undermine efforts to deal with the threat of climate change.
But the report suggests that special interest groups have hindered their elimination and little has changed. "The rules of the game are currently biased in favour of fossil fuels.
The status quo encourages energy companies to continue burning high-carbon fossil fuels and offers no incentive to change. We're throwing money at policies that are only going to make the problem worse in the long run by locking us into dangerous climate change," said Whitley.
The report said: "Investors are being sent the wrong signals on two fronts as carbon prices decline and fossil fuel subsidies increase." The report argues that fossil fuel subsidies also fail in one of their core stated objectives, which is to to benefit the poorest.
"Phasing out fossil fuel subsidies would create a win-win scenario. It would eliminate the perverse incentives that drive up carbon emissions, create price signals for investment in a low-carbon transition and reduce pressure on public finances."
theguardian.com
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