Producer Fossil Fuel Subsidies

For decades there has existed a community of researchers – spanning government ministries, international organisations, academia and civil society – working to increase the world’s understanding and awareness of harmful subsidies. Since September 2009, when the G-20 committed to phase out and rationalize inefficient fossil-fuel subsidies that lead to wasteful consumption and distorted long-term energy investments, much attention has turned to the subject. Marking just over a year after this agreement was reached, and in the run-up to the G-20’s Seoul Summit on 11−12 November, Subsidy Watch contacted Professor Cees van Beers and André de Moor, part of the fossil-fuel subsidy research community since the 1990s, and asked for a retrospective: how far have we come and how far have we yet to go?

Editor’s introduction: in late 2009 and early 2010, the Organization of the Petroleum Exporting Countries (OPEC) helped prepare a Joint Report, Analysis of the Scope of Energy Subsidies and Suggestions for the G-20 Initiative, in partnership with the International Energy Agency (IEA), the Organisation for Economic Co-operation and Development (OECD) and the World Bank. The purpose of the study was to analyse “the scope of energy subsidies” and provide suggestions for the G-20’s initiative to phase out and rationalize inefficient fossil-fuel subsidies that encourage wasteful consumption, and it was submitted to the G-20 Meeting of Finance Ministers and Central Bank Governors in Toronto, Canada, on 26-27 June 2010. In this article, the OPEC Secretariat explains its findings and perspective on the role of energy subsidies and their relationship with sustainable development.

The Leaders' Declaration from the Asia-Pacific Economic Cooperation's (APEC) 17th Economic Leaders' Meeting, released on 15 November 2009, included a commitment to "rationalize and phase out over the medium term fossil-fuel subsidies that encourage wasteful consumption, while recognising the importance of providing those in need with essential energy services." This closely mirrors the language of the Group of Twenty Finance Ministers and Central Bank Governors (G-20), who announced their own commitment to phase out and rationalize fossil-fuel subsidies at their Pittsburgh Summit on 25 September 2009.

From the outside, the European Union's Common Agricultural Policy (CAP) may look immutable. The only major effect of the reform passed by farm ministers in 2009, dubbed the ‘Health Check', was to dissipate more serious ambitions for change for the rest of the EU long-term budget (2007–2013).

The United States' Environmental Protection Agency (EPA) recently acknowledged that, despite generous levels of taxpayer funding, cellulosic ethanol was not scaling up as quickly as they had hoped. So they reduced the 2010 cellulosic ethanol mandate from 100 million gallons to 6.5 million gallons.