While wind and solar farms are popping up all over the planet, it hasn’t yet been enough to slake our thirst for fossil fuels. Fossil fuel subsidies grew by USD 110 billion from 2009 to reach USD 409 billion last year. The International Energy Agency (IEA) and the Organisation for Economic Co-operation and Development (OECD) say it has to stop.
While solar rebates and subsidies are often criticised as being too expensive, its often forgotten they are needed to help level the playing field in terms of competing with support the fossil fuel industry receives and has been receiving for decades. The era of cheap energy never really existed.
Echoing its earlier call for an end to fossil fuel subsidies that artificially lower the price of polluting energy sources and present a barrier to clean energy uptake, the IEA says subsidies to fossil-fuel consumers often fail to meet their intended objectives.
In a joint statement with the OECD, the two bodies state removing inefficient subsidies would raise national revenues and reduce greenhouse-gas emissions. The phaseout of fossil-fuel subsidies would also spur on investment, growth and jobs in the renewable energy and energy efficiency sectors.
To help governments understand just how much they are spending on propping up fossil fuels, the OECD has developed the Inventory of Estimated Budgetary Support and Tax Expenditures For Fossil Fuels.
The IEA says there has been some progress in reining in subsidies recently, with nearly half of the countries identified by the IEA as artificially lowering the price of energy to below real cost of supply taking steps to rationalise energy prices since 2010.
“While this is an encouraging start, much work remains to be done in order to realise the full extent of benefits. It is crucial that countries follow through on their commitments by implementing reforms that are well-designed and durable”, said IEA Executive Director van der Hoeven.
