Major OECD economies are using oil, gas and coal in the face of pledges to reduce their use and boost renewables
Major economies have dramatically increased support for the production and consumption of coal, oil and natural gas, with many countries struggling to balance longstanding promises to phase out inefficient fossil fuel subsidies with efforts to boost households. to protect. analysis by the OECD and the International Energy Agency (IEA).
New data shows that total government support for fossil fuels in 51 countries around the world nearly doubled to €697.2 billion in 2021, up from €362.4 billion in 2020. With the upturn in the global economy. In addition, consumption subsidies are expected to increase further in 2022 as a result of rising fuel prices and energy consumption.
“The Russian war of aggression against Ukraine has led to sharp increases in energy prices and has undermined energy security. However, significant increases in fossil fuel subsidies encourage wasteful consumption, without necessarily reaching low-income households,” said Secretary-General of the United Nations. OECD, Mathias Cormann. “We need to take measures that protect consumers from the extreme impacts of changing market and geopolitical forces in a way that helps us stay on the path to carbon neutrality, as well as energy security and affordability.”
“Fossil fuel subsidies are an obstacle to a more sustainable future, but the difficulty governments face in abolishing them is highlighted in times of high and volatile fuel prices. More investment in clean energy technologies and infrastructure is the only sustainable solution to the current global energy crisis and the best way to reduce consumers’ exposure to high fuel costs.” IEA Director Fatih Birol said.
The OECD and IEA produce complementary databases that provide estimates of various forms of government support for fossil fuels. The current combined OECD and IEA estimates cover 51 major economies, including the OECD, the G20 and 33 other major energy producing and consuming economies that represent approximately 85% of the world’s total energy supply.
The OECD analysis of budgetary transfers and tax exemptions related to the production and use of coal, oil, gas and other petroleum products in the G20 economies showed that total support for fossil fuels rose to USD 190 billion in 2021, from USD 147 billion. dollars in 2020. Support to producers reached a level not seen before in OECD tracking efforts, namely USD 64 billion in 2021, an increase of almost 50% year-on-year and 17% per year above the level of 2019. Those subsidies partially offset producers’ losses from domestic price controls, while global energy prices rose in late 2021. Estimated consumer support was $115 billion USD, up from USD 93 billion in 2020.
The IEA estimates fossil fuel subsidies by comparing prices in international markets with prices paid by domestic consumers that are kept artificially low by measures such as direct price regulation, formula pricing, border controls or taxes, and national purchase or supply mandates. Covering 42 economies, the IEA finds that consumer support has increased to $531 billion in 2021, more than triple the level of 2020, driven by rising energy prices.
The OECD and IEA have consistently called for phasing out support for inefficient fossil fuels and redirecting public funds towards developing low-carbon alternatives, alongside improvements in energy security and efficiency. Subsidies designed to support low-income households often favor wealthier households that consume more fuel and energy and should therefore be replaced by more targeted forms of support.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
