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New study: Europe provides more than €112 billion in fossil fuel subsidies

Joe Ware

28th September, 2017

With 80 percent of the world’s fossil fuel reserves needing to be left in the ground, it’s disturbing to discover that European nations are forking out 112 billion euros each year in fossil fuel subsidies, JOE WARE reports

Government subsidies for consuming already known fossil reserves, most of which must not be burned, is bad enough but financial inducements from the state to explore for new resources is surely madness.

We only have a finite amount of atmospheric carbon budget remaining and in the interest of being fair about it the vast majority of this should be reserved for the developing nations whose people live in poverty.

Rich countries, the nations first to industrialise like the UK and its European neighbours, have had their turn at the carbon buffet and they need to at least leave what remains for those that need it most.

So it seems rather perverse to learn that European countries, including the UK, are handing over a whopping 112 billion euros each year to prop up and support the production and consumption of fossil fuels.

Tax-payers' money

A new report by the Overseas Development Institute and Climate Action Network (CAN) Europe has for the first time gathered detailed information on the support provided to fossil fuels such as oil, gas and coal from 11 European countries and the EU between 2014 and 2016.

Regarding the UK, the largest producer of oil and gas in the EU, the study revealed that the Government has slashed taxes for oil and gas production in the North Sea to the tune of £665 million last year, cut VAT on power consumption - the equivalent of a £3.6 billion subsidy and given financial support to the transport sector totalling £7.4 billion including tax breaks on diesel which contributes to dangerous air pollution.

Lead author of Phase-Out 2020: Monitoring Europe’s fossil fuel subsidies, Shelagh Whitley, Head of Climate and Energy at ODI, said: “The air pollution crisis in cities across Europe and the recent diesel emissions testing scandal have rightly led to increased pressure for governments to act, yet our analysis shows European countries are providing enormous fossil fuel subsidies to the transport sector.

"This study shows how governments in Europe and the EU continue to subsidise and finance a reliance on oil, gas and coal, fuelling dangerous climate change and air pollution with tax-payers' money.”

In the age of Trump European leaders have been keen to burnish their green credentials. European governments and the EU have pledged to phase out fossil fuel subsidies by 2020 and to phase out emissions from fossil fuels by the second half of this century as part of the Paris Agreement. But this report shows that while delivering positive rhetoric with one hand they are propping up dirty energy projects with the other.

Sustainable energy transition

In the UK, although the North Sea oil and gas industry accounted for £2.1 billion in Government revenues as recently as 2014 it is now a drain on the economy due to low oil prices, tax cuts and the government taking a large share of decommissioning costs.

Government subsidies for consuming already known fossil reserves, most of which must not be burned, is bad enough but financial inducements from the state to explore for new resources is surely madness. The report authors show that the UK and France provided 253 million euros per year in public finance between 2014-16 to discover new fossil fuel resources.

And it’s not just national government’s using taxpayers’ money to fund generous bonusses for the fossil fuel industry, the report authors found that the European Union itself dished out an average of 4 billion euros every year between 2014-2016 in fossil fuel subsidies through its budget, development and investment banks and funds.

Wendel Trio, director of CAN Europe, said: “The 4 billion euros spent by the EU on fossil fuels, most of which goes to gas infrastructure, locks Europe into fossil fuel dependency for the decades to come. This violates the Paris Agreement’s requirement to make finances work for the climate.

“In addition, the fact that over 2 billion euros a year is provided by EU Member States to support coal-fired power, the dirtiest of all fossil fuels, is unacceptable. The EU must stop subsidising fossil fuels. Instead, the scarce resources of the EU budget and the EU’s development and investment banks should serve higher climate ambitions by financing the clean and sustainable energy transition.”

With Trump in the White House it is vital that international climate leadership is provided by European nations. This report reveals the extent to which their warm words ring hollow. If they want to be taken seriously they should start to do as they have promised and bring the dirty reality of fossil fuel subsidies to an end.

This Author

Joe Ware is a journalist and writer at Christian Aid and a New Voices contributor for the Ecologist. He's on twitter at @wareisjoe.


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