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Articles

FOSSIL FUEL EXPLORATION SUBSIDIES

Although there are evidences that use of fossil fuels must be reduced in order to fight  climate change, data show that rich countries are subsidising oil, gas and coal companies by about $88bn (£55.4bn) a year to explore for new reserves.

A study on global fossil fuel subsidies has revealed that the US government has provided companies with $5.2bn for fossil fuel exploration in 2013. Australia has spent $3.5bn, while Russia $2.4bn and the UK $1.2bn.

Additionally, the study has outlined that most of the support was in the form of tax breaks for exploration in deep offshore fields.

According to British think-tank the Overseas Development Institute (ODI) and Washington-based analysts Oil Change International, the public money was given to major multinationals as well as to smaller ones who specialise in exploratory work.

Moreover, the report has proved that Britain represents one of the most generous countries: in the five year period to 2014. It gave tax breaks to French, US, Middle Eastern and North American companies to explore the North Sea. Additionally, data have indicated that over $1.2bn of British budget went to two French companies, GDF-Suez and total ($450m) went to five US companies including Chevron, and $992m to five British companies.

According to the report, Britain also spent public funds for foreign companies to explore in countries such as Azerbaijan, Brazil, Ghana, Guinea, India and Indonesia, as well as Russia, Uganda and Qatar.

These figures represent the first detailed analysis of global fossil fuel exploration subsidies: the US spends $1.4bn a year for exploration in Columbia, Nigeria and Russia, while Russia is subsidising exploration in Venezuela and China, which in turn supports companies exploring Canada, Brazil and Mexico.

Experts have stressed that this study describes the insanity of this system that diverts investments from economic low-carbon alternatives such as solar, wind and hydro-power, undermining the prospects for an ambitious UN climate deal in 2015.

In this way, the report plays an important role showing how the issue of reforming fossil fuel subsidies is critical for climate change, as experts say.

The Oil Change International director Steve Kretzman has argued that despite these evidences, governments are spending billions of tax dollars each year to find more fossil fuels.

The study also criticizes the G20 countries for providing over $520m a year of indirect exploration subsidies by way of the World Bank group and other multilateral development banks (MDBs) to which they contribute funds.

Furthermore, the report has highlighted that in parallel with the rising costs of fossil-fuel exploration and production, the costs of renewable-energy technologies continue to fall rapidly, and the speed of growth in installed capacity of renewables has outperformed predictions since 2000. 

 

The gLAWcal Team

EPSEI project

Tuesday, 11 November 2014

(Source: The Guardian)