Progress on cutting fossil fuel subsidies ‘alarmingly slow’: OECD

Industrial air pollution

Major nations are “alarmingly slow” in keeping pledges to cut fossil fuel subsidies despite signs of a decline in support worth up to $200 billion a year, the Organization for Economic Cooperation and Development (OECD) said.

Reductions in damaging subsidies for oil, coal and natural gas would reduce air pollution, save cash and help a shift to greener energies before a Nov. 30-Dec. 11 UN summit in Paris on limiting climate change, it said.

“We are totally schizophrenic,” OECD Secretary-General Angel Gurria told an online news conference.

“We are trying to reduce emissions and we subsidize the consumption of fossil fuels” blamed for stoking global warming.

“Support for fossil fuels seems to have peaked, but global progress remains alarmingly slow,” he said of an updated inventory of subsidies.

The OECD estimated the annual value of subsidies for 2010-14 at between $160 billion and $200 billion, mostly for petroleum products, in the 34 OECD nations and China, India, Brazil, Russia, Indonesia and South Africa.

The Group of 20 leading economies agreed as long ago as 2009 to phase out inefficient subsidies for fossil fuels.

“Support now seems to follow a downward trend after having peaked twice in 2008 and 2011-12,” the OECD said, without giving exact annual figures. It said that not all subsidies identified were “unambiguously inefficient.”

Among recent reforms, the OECD pointed to cuts in support by India and Mexico for diesel and gasoline. Gurria said a fall in oil prices should make it easier to phase out support.

The OECD said it had uncovered about 800 types of subsidy, mainly in national budgets, but said they did not cover all factors causing artificially lower prices.

The OECD said its findings are not directly comparable with those of the International Energy Agency, which reckons fossil-fuel consumption subsidies worldwide amounted to $548 billion in 2013.

The OECD has been trying for more than a year to reach agreement on phasing out a form of coal subsidy that helps rich nations export technology for coal generation. Talks in Paris last week again failed to get a deal.

The negotiations will resume on Nov. 16, EU diplomats said.

Separately, environmental group Greenpeace said the world could shift to 100 percent renewable energy by 2050.

Investments of $1 trillion a year would be offset by savings of $1.07 trillion, partly because wind and solar power are free of fuel costs once set up, unlike fossil fuels, it said in a report.


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