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Fossil Fuel Subsidies and Clean Energy

Fossil Fuel Subsidies


Written by: Andra Vitola Koranteng

Fossil fuel subsidies are universal around the world, based on the approximate calculation by the international organizations roughly global value of global fossil fuel subsidies are between US$325 billion and US$5300 billion per year. 

Aside from the harmful impacts that these subsidies do to the environment, fossil fuel subsidies are as well economically inefficient. Economically this money can be used on other priorities like health and education. 

As for the environment, fossil fuels are the primary source of greenhouse gas emissions and prevent the shift towards clean energy. These fossil subsidies are weakening the competitiveness of renewable energy. 

Issues regarding fossil fuel subsidies have been an essential point on the G20 agenda since the 2009 Summit in Pittsburg during this summit G20 leaders pledge dedication to “rationalize and phase out over the medium term inefficient fossil fuel subsidies that encourage wasteful consumption.”

However, even after all these years, the gap between commitment and actions remains a huge issue. A study by the Overseas Development Institute (ODI) and Oil Change International (OCI) roughly estimated that between 2013 and 2014, G20 countries, on average, spend US$78 million per year on fossil fuel subsidies (through direct spending and tax breaks).[1]

Although G20 countries have been continuously committing to act upon the issues of the fossil fuel subsidies yet studies show that government support for the production of coal-fired power actually has actually increased, from US$17.2 billion in a year (2013-2014) to US$47.3 billion per year (2016-2017). 

In general, on average G20 governments support coal through US$27.6 billion in domestic and international public finance, US$15.4 billion in fiscal support, and US$20.9 billion in state-owned enterprise (SOE) investments per year.[2

Recent reports show that G20 countries still, on average, contribute at least US$ 77 billion per year in fossil fuels (oil, gas, and coal projects), which are more than three times than what is provided to support clean energy.[3]

Reviewed by: Abraham Sumalinog


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