Despite pledging in 2009 to phase out public subsidies for the fossil fuel industry, G20 countries have disregarded those promises and are now spending US$88 billion a year to fund the discovery of new gas, coal, and oil deposits around the world, according to a new report published last month by the Overseas Development Institute and Oil Change International.
The report, titled The Fossil Fuel Bailout: G20 Subsidies for Oil, Gas and Coal, found that those explorations risk devastating consequences for world economies and the rapidly warming planet. These states are spending more than double on finding new regions to drill than the top 20 private oil and gas companies ― largely with taxpayer money.
As existing wells dry up, discovering new reserves in more remote areas has become costly. Last year, the world’s top 20 oil and gas companies invested just $37 billion in exploring reserves of oil, gas and coal.
The report says: “The scale at which G20 countries are subsidizing the search for more oil, gas and coal ― through national subsidies, investment by state-owned enterprises and public finance for exploration ― is not consistent with agreed goals on the removal of fossil fuel subsidies or with agreed climate goals, and is increasingly uneconomic.”
The 2009 pledge, known as the Copenhagen Accord, recognises that any rise in global temperature should be below 2 degrees Celsius. But the accord was non-binding ― and some of its authors, including the United States, Brazil, and China, are among the biggest financial backers of global fossil fuel exploration.
Keeping global temperature increases within 2C requires leaving almost two-thirds of those untapped reserves in the ground.
The US has become the world’s largest producer of both oil and natural gas, surpassing even Saudi Arabia and Russia. It spends more than $6 billion a year on domestic and foreign fossil fuel exploration projects, mostly through tax deduction.
The report notes the Obama administration “also champions the current oil and gas boom as the centerpiece of its ‘All of the Above’ energy strategy, which has been the major driver of the increase in fossil fuel subsidy values.”
The exact size of this public support is hard to confirm, however, because specific subsidies to individual companies are considered “confidential tax information” in the US.
The report says that despite the “widespread perception” that renewable energy is costly, “every dollar of renewable energy subsidies brings back $2.5 in investments, compared to $1.3 brought by every dollar in fossil fuel subsidies”.
It says: “Scrapping these subsidies would begin to create a level playing field between renewables and fossil fuel energy.”
[Abridged from Common Dreams.]
Like the article? Subscribe to Green Left now! You can also like us on Facebook and follow us on Twitter.