Fossil Fuel Subsidies

Fossil Fuel SubsidiesTime to stop paying polluters to pollute

The WTO has defined subsidies as

“a financial contribution by government or a public body that confers a benefit” (WTO 1994).

However, GBE endorses a broader definition, which includes measures that keep prices low or exempt certain groups from taxation.

“A result of a government action that confers an advantage on consumers and producers, in order to supplement their income or lower their costs, but in doing so, discriminates against sound environmental practices.” (IEEP 2009)

In 2013, consumer subsidies for fossil fuels were worth €474 billion globally, while exploration subsidies for fossil fuel producers in the G20 are worth €76 billion annually (IEA 2014Oil Change International et al 2014). The IMF has estimated that global fossil fuel subsidies, including the external costs of energy consumption, amount to 2.5% of global GDP or 8% of total government revenues (IMF 2013) – spending that is diverted from other areas, such as health, education or welfare, and which creates unnecessarily high levels of national debt and contributes to structural deficits.

Many industrial sectors, such as energy intensive industries, manufacturing, aviation, agriculture, forestry, and fisheries receive direct subsidies from government and are exempt from many taxes, e.g. energy taxes, fuel duties, and VAT. After more than 30 years of environmental taxation in Europe and as many years of research into subsidies and their reform, it is clear that there are better ways to address competitiveness concerns than undifferentiated subsidies.

GBE has been involved in numerous campaigns to move forward on reforming environmentally harmful subsidies at EU level, including:

  • Advocating for the publication by the European Commissions DG Environment of a Roadmap for the Reform of Environmentally Harmful Subsidies;
  • Research on possible drivers of subsidy reform;
  • Campaigns in favour of the phase-out of subsidies for coal-mining in Europe;
  • Work in the UK to highlight the scale of fossil fuel exploration subsidies in the North Sea.
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End fossil fuel subsidies without further delay

Green Budget Europe Director James Nix writes in today’s Financial Times: On June 1, six of Europe’s largest oil...

Commission must tackle fossil fuel subsidies

Green Budget Europe Director James Nix writes in Euractiv: There is a growing global awareness of the real cost of...

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