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Fossil fuel subsidies rising in EU despite pledges to phase them out

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Fossil fuel subsidies rising in EU despite pledges to phase them out


Fossil fuel subsidies are continuing to rise in the EU despite calls from Brussels to phase them out, new figures reveal.

Support for coal, gas and oil grew by 11.6 percent among member states over the last two years, according to Euronews analysis of IMF (International Monetary Fund) data.

The subsidies, lower in the EU than other leading world economies, are seen as a key stumbling block to tackling climate change.

The G20 group of leading economies, which includes the EU, pledged in 2009 to phase out the aid.

But, six years on, the subsidies – which include direct ones like cut-price fuel and tax breaks and indirect examples such as government picking up the tab for polluters’ environmental damage – continue to rise, standing at 4.82 trillion euros globally, 6.5 percent of the world’s GDP.

Top 10 fossil fuel subsidies per capita for G20 countries, 2013 and 2015

In the US fossil fuel subsidies hit 1,985 euros per American, a jump of nearly 14 percent on 2013 figures.

In China, per capita support grew by 22 percent over the same period, to 1,506 euros.

Saudi Arabia, where subsidies were 3,095 per citizen in 2015, is one of the few G20 economies where support has fallen over the last two years.

In the EU the subsidies were 603 euros per person in 2013, jumping to 673 euros this year. The countries with the highest subsidies per citizen are Luxembourg (3,416 euros), Bulgaria (2,481 euros), Czech Republic (1,522 euros) and Poland (1,300 euros).

Roland Jöbstl, climate and energy policy officer at the European Environmental Bureau, said the rises in the EU were down to indirect costs, including countries undercharging for the impacts of global warming and air pollution.

“The European Commission is not doing enough,” he added. “But it’s the member states who are backing out of any proposals.

“A couple of years ago the EC proposed the harmonisation across Europe of taxes on energy. But member states resisted moving on with it and it was later dropped.

“There’s no reason why energy taxes should be lower in Luxembourg than in say Italy.

Mr Jöbstl added fossil fuel subsidies impinged on the fight to tackle climate change.

“If you subsidise fossil fuels you create an obstacle against innovation and new technologies,” he said. “You offer big companies, who got us into this mess in the first place, the chance to keep their positions and you’re working against new companies who can provide new forms of renewable energy.”

Fossil fuel subsidies per capita in the EU, 2013 and 2015

The IMF, presenting the data, said: “It is generally in countries’ own interest to move ahead unilaterally with energy subsidy reform. Top subsidisers in percent of GDP and in per capita subsidies stand to gain the most. The benefits will mostly accrue at the local level, by reducing local pollution and generating much needed revenues. Taxing fuels to reflect environmental costs is also straightforward administratively, as it can build off road fuel excises which are well established in most countries.

“Energy subsidy reform can also contribute to carbon emissions reduction and help countries make pledges ahead of the Paris 2015 UN climate conference. To achieve significant carbon emissions cuts at the global level, it would be essential for top subsidisers in dollar terms to play a leading role.

“Low international energy prices have opened a window of opportunity for countries to move towards more efficient pricing of energy. However, a gradual approach may be desirable, given the size of the required price increases and uncertainty around the optimum level of taxes on negative externalities. This would allow time to further refine estimates, for households and firms to adjust, and for governments to implement measures to protect the poor.”

The European Commission claimed the EU was moving towards phasing out harmful environmental subsidies.

A spokeswoman said: “The guidelines attempt to strike a balance between the need to phase out fossil fuels and security of supply concerns.

“Therefore, aid is still allowed to fossil fuels under the capacity mechanism – i.e. if a member state does not have sufficient generation capacity to cover the demand, it may support demand response measures or fossil fuels to avoid electricity black outs.”

She added another EU directive requires countries to fulfil at least 20 percent of its total energy needs with renewables by 2020.

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