G20 fund fossil fuels

Deutsche Welle: What were the main findings of your report?

We were looking into fossil fuel exploration subsidies, so that’s government support for looking for new reserves of oil, gas and coal. And what we found is that the G20 governments together are spending about $88 billion a year supporting exploration.

What impact is this exploration likely to have on the global climate?

We were told by the Intergovernmental Panel on Climate Change last week that we need to keep the majority of fossil fuel reserves that we already have in ground and not burn them, if we’re to avoid dangerous climate change. So what that means in essence is that governments are subsidizing climate change because they are looking for new fossil fuel reserves when we can’t burn what we already have.

Which G20 countries are spending the most on finding new oil, gas and coal reserves?

What we find is that different countries are spending different amounts of money through different subsidies. In terms of domestic subsidies we find the highest subsidies are from the United Kingdom, the United States and Australia and for investment by state-owned enterprise – so these are big state-owned oil, gas and coal companies. The highest level of investment is coming from Saudi Arabia and Brazil. For public finance from government-owned banks, we find it’s coming from Japan and Korea who are spending money overseas looking for more fossil fuels.

Your report reveals that investment of public money by G20 governments in finding fossil fuel reserves is more than double that being invested by the top 20 private oil and gas firms. Why are such heavy subsidies needed?

What this shows us is that you need government support to have energy production and consumption. About eight times more money is being spent on fossil fuel subsidies than on renewable energy support. What that tells us is you need to spend a lot of money to have the energy system that we have now and to have it work properly. What we need to do is shift that support from dirty fossil fuel – high polluting energy sources – to cleaner and more low-carbon energy. And governments have the tools to do that; they just need to use those tools differently.

So, looking at energy security – are these subsidies necessary to ensure we have enough power to keep the lights on and our economies growing?

We now have many different sources of energy that we can use to provide that energy security. And a lot of that can be done domestically, there’s a lot of opportunity to develop renewables at a national level, which would also provide additional energy security for countries.

Why don't these countries invest more in renewable technologies?

What we need, is to have a strong signal from governments. We see that when governments provide that strong signal on clean energy, investment flows behind it. Governments are continuing to support centuries-old forms of energy, and instead of looking towards the future and enabling new forms of energy, they are really continuing to subsidize as they have done in the past.

What impact are these fossil fuel subsidies having on the development of renewable energy technology?

It means that you don’t have a level playing field, so in some countries you’re talking about renewables coming onto the grid and they have to compete directly with fossil fuel sources of energy. For example, we have looked at energy in India, where you have coal-fire power which is subsidized, which means that renewables always seem more expensive. When the subsidies are taken away, renewables are able to compete on a much more level playing field and you’re likely to see much more investment not only in renewables, but also in energy efficiency. Because if energy prices aren’t falsely suppressed you get people investing in using that energy as well as possible.

What would steps would you like to see made to address this issue at the G20 summit in Brisbane this week?

We are calling for an immediate end to these subsidies. What that would mean would be that the G20 would be meeting its existing pledges to phase out fossil fuel subsidies, which they pledged five years ago. They should begin with an immediate phase-out of exploration, followed by a more gradual phase-out of other subsidies to fossil fuel production and consumption.

We have seen in the last few days that climate change is going to be on the agenda. This issue fits really well with what the G20 are planning to address already. They want to look at tax and transparency and a number of these subsidies that we’ve identified are in the form of tax breaks. And a lot of this information is hidden. We think these governments should be doing more on transparency – first disclosing these subsidies and then planning to phase them out, which is critical at this point.

Shelagh Whitley is a research fellow at the Overseas Development Institute, a London-based think tank. She is a co-author for the report: The fossil fuel bailout: G20 subsidies for oil, gas and coal exploration. #link:http://www.odi.org/g20-fossil-fuel-subsidies:The fossil fuel bailout: G20 subsidies for oil, gas and coal exploration#.