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» February 20, 2012

New research estimates upstream oil and gas subsidies in Russia and Norway

 

GENEVA—February 20, 2012—Detailed estimates of subsidies to upstream oil and gas activities in Russia and Norway have been issued as part of a series of studies that are shedding light on how much governments spend to support fossil fuel production.

Fossil Fuels: At What Cost? Government Support for Oil and Gas Upstream Activities in Russia was issued Monday, while Fossil Fuels: At What Cost? Government Support for Oil and Gas Upstream Activities in Norway was issued earlier this month. They are part of a series of reports published by the International Institute for Sustainable Development’s Global Subsidies Initiative. The Russia report was initiated and prepared by WWF Russia. The Norway report was prepared by Econ Pöyry.

The Russia report quantifies the value of 17 subsidy schemes totalling US$8.1 billion in 2009 and US$14.4 billion in 2010—4.2 per cent and 6.0 per cent respectively of the total value of oil and gas production in Russia.

The Norwegian government provided US$4 billion in subsidies for upstream oil and gas activities in 2009—roughly 13 per cent of the oil and gas industry’s total revenue.

The reports use an internationally agreed definition of subsidy adopted by the World Trade Organization to determine the value of oil and gas production subsidies. This detailed analysis is the first of its kind in Russia and Norway.

In both countries, subsidies are provided to develop new fields in remote areas, including the Arctic.

The reports are intended to improve transparency regarding subsidies provided to the oil and gas industry and foster a public debate on whether they constitute a good use of public funds.

In recent years, governments around the world have pledged to reform their fossil fuel subsidies as a means to reduce greenhouse gas emissions and to preserve public finances.

In 2009, G20 and Asia-Pacific Economic Cooperation countries, including Russia, undertook to rationalize and phase out inefficient fossil fuel subsidies that encourage wasteful consumption over the medium-term. While not a member of the G20 or APEC, Norway supports the commitment and is a member of the Friends of Fossil Fuel Subsidy Reform group of countries.

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For more information about the Russia report, contact author Ivetta Gerasimchuk at +7 916 487 4382 or igerasimchuk@iisd.org. For more about the Norway report, contact Kerryn Lang at +41 22 917-8920 or klang@iisd.org, or Damon Vis-Dunbar at +41 22 917 8848 or dvis-dunbar@iisd.org.

 

IISD contributes to sustainable development by advancing policy recommendations on international trade and investment, economic policy, climate change and energy, natural and social capital, and the enabling role of communication technologies in these areas.