Luxembourg urged to radically slash fossil fuel subsidies

Tiny country one of EU’s largest per capita supporters of oil, gas and coal suggests IMF data

Grin and bear it. Luxembourg environment minister Carole Dieschbourg needs to herd the 28 EU member states in Paris (Pic: UN Photos)

Grin and bear it. Luxembourg environment minister Carole Dieschbourg needs to herd the 28 EU member states in Paris (Pic: UN Photos)

By Ed King

The European Union’s second smallest country boasts its highest level of fossil fuel subsidies per person, according to data published by the International Monetary Fund (IMF).

Luxembourg supports coal, gas and oil use within its borders to the tune of €3,415 a year, in the form of tax breaks and what campaigners say are “ultra-low” rates on transport fuel.

That’s around €1000 more than Bulgaria, the second highest provider of subsidies among the EU’s 28 member states.

As holders of the rotating EU presidency and head of the delegation to this year’s Paris climate summit, Luxembourg should make greater efforts to cut its support said James Nix, from Green Budget Europe, which highlighted the findings this week.

“To retain its credibility, and maintain that of the EU, Luxembourg needs to cut its fossil fuel subsidies before it enters December’s climate change negotiations,” he said.

On Monday the head of the OECD Angel Gurria described the attitude of top economies to tackling climate change as “schizophrenic”, querying their calls for tough action while offering handouts worth up to $200 billion to the fossil fuel sector.

Earlier this year the IMF estimated that over $5 trillion of subsidies were directed towards carbon polluting industries, a figure higher than previous estimates as it included the costs of climate change and the effects of emissions on health.

In an email to RTCC, Olaf Münichsdorfer, an advisor to Luxembourg environment minister Carole Dieschbourg, said the government was implementing revised tax rates and efficiency measures to slow emissions.

“While the Green Budget Europe press release refers to an IMF study that assimilates what it qualifies as “inefficient taxation” of fossil fuels to “subsidization”, it is worth pointing out that, contrary to other countries, Luxembourg does not directly subsidize fossil fuels and respects the tax directives,” he said.

Münichsdorfer added it was “regrettable” that the figures did not take into account the 165,000 non-resident commuters that travel through the country every day.

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