IEA: Fossil fuel subsidies increased 30% in 2011

By John Parnell

Global fossil fuel subsidies grew by 30% last despite calls to reduce them, according to the International Energy Agency (IEA).

Speaking at the launch of the IEA’s World Energy Outlook 2012, Fatih Birol, chief economist with the IEA said the surge in support for oil and gas energy sources was disappointing.

“Fossil fuel subsidies last year reached $523bn,” said Birol. “This would suggest that the appetite for reform is waning.”

Birol said the bulk of this growth was in the Middle East and North Africa following the Arab Spring.

Many governments sought not to create further turmoil in the region which was in part triggered by rising food prices.

Renewable energy subsidies during the same period totalled $88bn.

Fossil fuel subsidies have increased by 30% despite numerous calls for them to be cut. (Source: Flickr/XC biker)

Reassigning some of this money has been suggested as one source of climate finance for the Green Climate Fund, which has a target to raise $100bn a year by 2020.

The forthcoming UNFCCC climate change talks in Doha will discuss long-term finance plans with the removal of fossil fuel subsidies making it onto the agenda, which describes even a partial redirection as being capable of yielding “substantial amounts of resources per year”.

Countries agreed at the Rio+20 summit to address the issue of “harmful and inefficient fossil fuel subsidies that encourage wasteful consumption and undermine sustainable development“. However, finding a way to ensure governments do this is far from easy, however the news is not all bad.

“Some of those governments are gaining an interest in energy efficiency for exactly that reason,” IEA Deputy Executive Director Richard H Jones told RTCC. “They want to continue to keep the price of energy low but they don’t want to forego the revenues that they receive by exporting it. So they’re trying to find ways to get their people to use as little of it as possible.

“If they can’t increase price to [reduce consumption] then they need to encourage efficiency. They can’t do them both but we’re all better off that they’re doing one. They waste a lot of electricity in that part of world,” said Jones who includes stints as the US Ambassador to Israel, Kuwait and Lebanon on his CV before joining the IEA.

The report also calls for an increased focus on energy efficiency around the world, describing energy efficiency as “the hidden fuel”.

Energy efficiency can keep the door to limiting warming to 2°C open for an additional five years according to the report. At present rates, this threshold of warming, beyond which scientists classify the changes as “dangerous”, will be reached in 2017, but efficiency could push this back to 2022.

Without an international political deal to reduce emissions agreed through the UN, this would only be an exercise in delaying the inevitable.

They said an international deal on emissions was necessary to send the right signals to the energy sector for longer-term, transformational changes to the sector.

“Adequate investment in low-carbon energy technologies is dependent on greater certainty about long-term climate policies – the outcome of the Durban climate talks cannot be said to provide these conditions,” the report states.

It estimates that globally, only around one third of potential energy efficiency measures have been put in place with industry leading the way and building efficiency lagging.

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