Global public subsidies for fossil fuels nearly doubled to $700 billion in 2021, an analysis showed, posing a “barrier” to tackling the climate crisis.
Despite the huge profits of fossil fuel companies, subsidies soared as governments sought to protect citizens from rising energy prices as the world economy recovered from the Covid-19 pandemic. .
Most of the subsidies were used to reduce the price paid by consumers. This greatly benefits wealthier households, as they use the most energy, rather than focusing on low-income households. Subsidies are expected to rise further in 2022, as Russia’s war in Ukraine has pushed energy prices even higher.
“Fossil fuel subsidies are an obstacle to a more sustainable future, but the difficulty governments face in removing them is highlighted at times of high and volatile fuel prices,” said Fatih Birol, director of the International Energy Agency. , which produced the analysis. with the OECD.
“Increased investment in clean energy technologies and infrastructure is the only lasting solution to the current global energy crisis and the best way to reduce consumer exposure to high fuel costs,” Birol said.
“Significant increases in fossil fuel subsidies encourage wasteful consumption, although they do not necessarily reach low-income households,” said Mathias Cormann, secretary-general of the OECD. “We need to adopt measures that protect consumers [and] Please help us stay on the path to carbon neutrality as well as energy security and affordability.”
The analysis covers 51 key countries and represents 85% of the world’s total energy supply. The subsidies that kept fossil fuel prices artificially low more than tripled to $531 billion in 2021, compared to 2020. Subsidies for oil and gas production hit a record high of $64 billion. The IEA said in May 2021 that no new fossil fuel projects should be developed if the world wants to meet its climate goals.
“A period of rising fossil fuel energy prices, when oil and gas companies post record profits, should be the ideal time for governments to remove subsidies on fossil fuel production, so watch an increase in government support for fossil fuels is now infuriating.” said Gyorgy Dallos of Greenpeace International.
“Governments must stick to their ecological commitments. On the consumer side, they urgently need to replace non-targeted support measures with targeted income support for people experiencing energy poverty.”
The G20 agreed in 2009 to phase out “inefficient” fossil fuel subsidies, and in 2016 the G7 set a 2025 deadline. But little progress has been made.
The total of $697 billion covers explicit subsidies, including price reductions, government financing and tax breaks. Estimates that include implicit subsidies, i.e. the cost of climate and air pollution damage caused by fossil fuels, are much higher. These amounted to $5.9 trillion in 2020, according to the International Monetary Fund, or $11 million per minute.
The Guardian revealed in July that the oil and gas sector has made an average of $1 trillion a year in pure profits for the last 50 years. These large sums have provided the power to “buy all politicians, all systems” and delay action on the climate crisis, said Professor Aviel Verbruggen, author of that analysis.
The energy crisis is proving extremely profitable for oil companies, even without subsidies. In the first six months of 2022, five leading companies — BP, Shell, ExxonMobil, Chevron, and Total — posted adjusted earnings of nearly $100 billion. The figure is the same sum that rich nations promised poor nations to help tackle the climate crisis by 2020, but failed to deliver.