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infrastructure and politicians touring the
world to promote the fossil-fuel interests
of transnational companies. By compari-
son, the IEA puts renewable energy subsi-
dies at around $140 billion in total.
At this point in history, most fossil fuel
subsidies are indefensible. While those
that serve a legitimate purpose – such as
making fuel affordable to people on low
incomes – would need careful replace-
ment, tax-payer money should not be
used, as UN chief António Guterres put
it earlier this year, ‘to boost hurricanes,
spread droughts and (fuel) heat waves’.
Although the G20 nations pledged to
phase them out back in 2009, little pro-
gress has been made. The sharp drop in
subsidies for coal production in the EU is
positive. But while some countries capi-
talized on low oil prices to cut their fuel
consumption subsidies between 2010 and
2016, the IEA reported that 2017 and 2018
saw a rise in consumption subsidies, as oil
prices rose again.
Meanwhile, some countries are heading
in precisely the wrong direction: over
the next five years, the UK’s oil industry
is set to receive $6.2 billion more than it
pays in taxes, thanks to generous govern-
ment support.^1 In the US, Republicans’ tax
reforms in 2017 handed $25 billion to oil
and gas companies, according to the Insti-
tute on Taxation and Economic Policy;
while Australia is proposing to support
new coalmines to the tune of hundreds of
millions of dollars.^2
Much of this has to do with the lobby-
ing power and influence of the fossil-
fuel industry. As campaigners raise their
voices in opposition, there is real value in
picking up on subsidies and adding their
elimination to their demands. A recent
report showed that stopping fossil-fuel
subsidies could prevent over a billion
tonnes of greenhouse emissions in the
UK alone.^3 The moment has come to end
these perverse pay-outs to polluters. O
1 ‘North Sea oil to post losses of £1 billion a year’,
The Daily Telegraph, 16 March 2016.
2 Overseas Development Institute, ‘G20 Coal
Subsidies: Australia’, June 2018.
3 Platform, Oil Change, Friends of the Earth, ‘Sea
change: climate emergency, jobs and managing the
phase-out of UK oil and gas extraction’, May 2019.Fossil-fuel subsidies are in the spotlight
again. Unbelievable as it may sound, with
climate impacts hitting hard and fast,
government support for oil, coal and gas
seems to be on the rise.
Yet there is very little consensus on
just how much money goes towards sub-
sidizing fossil fuels. While the argument
against these subsidies is simple (‘Want
to prevent climate breakdown? Then
stop giving money away to the industries
that cause it’) the details are a bit more
complex.
That’s because most fossil fuel sub-
sidies aren’t usually direct government
handouts but forms of indirect support
that are measured – and defined – in
different ways, which require some
unpacking.
The first set are known as ‘produc-
tion’ subsidies. These take the form of
direct payments and tax breaks to fossil-
fuel companies, including subsidies for
specific extraction projects and payments
towards decommissioning and clean-
up costs. These vary hugely between
countries and are often complex and
hard to measure, so figures from theInternational Energy Agency (IEA) of $70
to $100 billion per year are likely to be an
underestimate.
The second type are tax breaks or pay-
ments that lower the price of fossil fuels
to the consumer. Key examples of these
‘consumption’ subsidies – which the
IEA estimated at $400 billion in 2018 –
include measures such as reduced Value
Added Tax (VAT) on heating fuels in the
UK, and heavily subsidized vehicle fuel in
oil-rich states like Saudi Arabia.
The final set falls into what is often
described as the ‘post-tax’ category. It’s
not so much a subsidy as the ‘unpaid
costs to society’ of climate change, air
pollution and other negative impacts
caused by fossil-fuel use. A more slippery
concept, it is a useful way to highlight the
‘uncounted price’ of all the damage that
burning carbon causes – the IMF esti-
mates this at $4,700 billion.
Campaigners tend to focus on produc-
tion and consumption subsidies, which
total $500 billion per year between them.
This is far from the full picture – other
uncounted forms of government support
include military spending to protect oilWords — Danny ChiversJO
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WHY IS PUBLIC MONEY PROPPING UP FOSSIL FUELS?
58 NEW INTERNATIONALIST