Brussels, 13/11/2014 (Agence Europe) - On average, the G20 countries are spending $88 billion (€70 billion) a year on subsidies to fund the exploration of fossil energies (coal, gas and oil), according to a report by the think tank Overseas Development Institute and the environmental NGO Oil Change International, which was published on Tuesday 11 November, a few days ahead of the G20 summit in Brisbane (15-16 November).
This $88 billion comes from state enterprise investments ($49 billion), funds paid via direct public aid and tax breaks ($23 billion) and funding through public banks and international institutions ($16 billion). By way of comparison, the report stresses, this amount represents nearly twice the amount judged necessary by the International Energy Agency (IEA) to supply the entire planet with electricity and heating by 2030.
The report lays particular emphasis on massive public funding for the prospecting of fossil energy sources, via state enterprises in the United States ($5.1 billion in 2013), Australia ($3.5 billion), Russia ($2.4 billion), the United Kingdom ($1.2 billion a year) - with the French energy company Total receiving $838 million and its Norwegian counterpart Statoil $407 million between 2009 and 2014. Mexico and India (between $2 and $5 billion in aid a year), China ($9 billion), Brazil ($11 billion) and Saudi Arabia ($17 billion) also grant massive amounts of support.
As for Europe, the report notes that Italy has two national subsidies to incentivise the exploration of fossil fuels, worth a total of 400 million a year. France continues to grant limited subsidies ($42 million a year) and Germany, which has a strong policy in favour of renewables and has pledged to come out of nuclear, has no national programme of support specifically targeting fossil fuel exploration, but continues to give its mining sector $2 billion a year.
The report goes on to stress that the $88 billion a year in exploration subsidies are just a fraction of the aid granted by the G20 countries to the sector: $775 billion in subsidies were granted to the exploration of fossil energy sources in 2012, compared to $101 billion for renewables in 2013.
In 2009, the G20 countries pledged to put an end to 'ineffective' subsidies for the exploitation of fossil energy, the production and consumption of which are believed to be partly responsible for global warming, the two organisations stress. However, despite the increase in costs for reserves, which are increasingly difficult to achieve, and the drop in oil and coal prices, generous subsidies continue to cushion the exploration of fossil fuels, which would otherwise not be profitable. This is the case despite the fact that the cost of renewable energies are falling and produce better yields, with every dollar in subsidies to renewables attracting investment of $2.5, whilst a dollar in subsidies to fossil fuels draws just $1.3 of investment, the report points out.
By granting support to fossil fuel exploration, the G20 countries are creating a “lose-lose-lose” situation, the two organisations warn: they are channelling considerable amounts of money into highly carbonised resources, the exploitation of which has disastrous effects on the climate, whilst counteracting investment in low-carbon alternatives (solar, wind and hydraulic energy). Lastly, they are undermining the prospects of an ambitious climate agreement in 2015. “If countries intend to meet their commitments to the 2°C climate target, at least two thirds of existing proven reserves of oil, gas and coal need to be left in the ground”, the report concludes. (EH)