Despite pledging in 2009 to phase out public subsidies for the fossil
fuel industry, G20 countries have disregarded those promises and are
currently spending $88 billion a year in taxpayer money to fund the
discovery of new gas, coal, and oil deposits around the world, according
to a new report published Tuesday by the Overseas Development Institute and Oil Change International.
The report, titled The Fossil Fuel Bailout: G20 Subsidies for Oil, Gas and Coal Exploration (pdf),
found that those explorations risk devastating consequences for world
economies and the rapidly warming planet alike. And at $88 billion a
year, those states are spending more than double on finding new regions
to drill than the top 20 private oil and gas companies—largely with
taxpayer money.
As existing wells dry up, discovering new reserves in more remote
areas has become costly. In 2013, the world's top 20 oil and gas
companies invested just $37 billion in exploring reserves of oil, gas
and coal.
"G20 governments' exploration subsidies marry bad economics with
potentially disastrous consequences for climate change," write report
authors Elizabeth Bast, Shakuntala Makhijani, Sam Pickard and Shelagh
Whitley. "In effect, governments are propping up the development of oil,
gas and coal reserves that cannot be exploited if the world is to avoid
dangerous climate change."
Those countries are creating what the report terms a "triple-lose"
scenario: investing financially in high-carbon assets that may cause
catastrophic climate effects; diverting potential funds for low-carbon
energy alternatives like solar, hydro, and wind power; and undermining
prospects for an effective, large-scale climate deal next year.
"The scale at which G20 countries are subsidizing the search for more
oil, gas and coal—through national subsidies, investment by state-owned
enterprises and public finance for exploration—is not consistent with
agreed goals on the removal of fossil fuel subsidies or with agreed
climate goals, and is increasingly uneconomic," the report states.
The 2009 pledge, known as the Copenhagen Accord, recognizes that any
increase in global temperature should be below two degrees Celsius. But
the accord was non-binding—and some of its authors, including the United
States, Brazil, and China, are among the biggest financial backers of
global fossil fuel exploration. Keeping global temperature increases
within 2 C would require leaving almost two-thirds of those untapped
reserves in the ground.
"Without government support for exploration and wider fossil-fuel
subsidies, large swathes of today’s fossil-fuel development would be
unprofitable," the report states. "Directing public finance and consumer
spending towards a sector that is uneconomic, as well as unsustainable,
represents a double folly... Globally, subsidies for the production and
use of fossil fuels were estimated at $775 billion in 2012."
The U.S. has become the world's largest producer of both oil and
natural gas, surpassing even Saudi Arabia and Russia. It spends more
than $6 billion annually on domestic and foreign fossil fuel exploration
projects, mostly through tax deductions, and Congress has rejected
every plan to repeal those breaks since President Barack Obama took
office, the report notes.
But the Obama administration "also champions the current oil and gas
boom as the centerpiece of its ‘All of the Above’ energy strategy, which
has been the major driver of the increase in fossil fuel subsidy
values," according to the report. And some of the world's largest oil
and gas companies, like Exxon-Mobile, Chevron, and BP, "are likely to be
benefiting the most from exploration subsidies."
The exact size of this public support is hard to confirm, however,
because specific subsidies to individual companies are considered
"confidential tax information" in the U.S.
According to the report, every dollar of renewable energy subsidies
brings back $2.5 in investments, compared to $1.3 brought by every
dollar in fossil fuel subsidies.
"Despite the widespread perception that renewables are costly, our
research reveals that finding new fossil fuel reserves is costing nearly
$88 billion in exploration subsidies across the G20," Whitley said.
"Scrapping these subsidies would begin to create a level playing field
between renewables and fossil fuel energy."
from here
Choices? - Capitalism? Barbarism? Socialism?
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