IEA calls for end to fossil fuel subsidies
Thechief economist of the International Energy Agency (IEA) has urged
the world to slash hundreds of billions of dollars of fossil fuel
subsidies or face the prospect of a catastrophic 3.5 degrees
Centigrade rise in global temperatures.
“Today $409 billion equivalent of fossil fuels subsidies are in
place which encourage developing countries - where the bulk of the
energy demand and CO2 emissions come from - [towards a] wasteful
use of energy,” Fatih Birol told EurActiv in an exclusive
interview.
The sum represents
target=”_blank”>a $110 billion increase on the 2009 level.
According to Birol, cutting such subsidies in major non-OECD
countries is “the one single policy item” which could help reorient
the world towards a trajectory of 2 degrees global warming.
It would also reduce CO2 emissions and help renewable energies
such as solar and wind power to get a bigger market share,
according to the IEA’s World Energy Outlook 2011 report which will
be released on 9 November.
Analysis in the report “indicates that the door for a 2 degrees
trajectory may be closing if we do not act urgently and boldly,”
Birol said.
“In our central scenario, seven countries introduce some form of
carbon pricing which brings us to a 3.5 degree trajectory,” he
added.
“But if we want to keep the temperature increase to 2 degrees,
many more countries need to do so. The most important condition is
that there’s coordinated international action in place.”
Irreversible impact
A 3.5 degree temperature rise would cause “irreversible impacts”
according to the Inter-governmental Panel on Climate Change
(IPCC), including the mass extinction of an estimated 40%-70% of
the world’s species.
To avoid this nightmare scenario, Birol said that the upcoming
Climate Change conference in Durban, South Africa, could be “very
important and in fact one of the last opportunities if we are
serious about limiting temperature increase to 2 degrees
Celsius.”
“However, looking at the current international policy debate on
climate change I would say that the wind is not blowing in the
right direction,” he warned.
Outside of the talks, an international consensus already exists
on the need to try to cut CO2 emissions by providing start-up
finance to renewable energy firms through loans, tariffs,
guarantees, and incentives.
Lion’s share of spending not on renewable
But
target=”_blank”>research by Bloomberg New Energy Finance in
2010 found that governments around the world were spending
twelve times more on fossil fuel subsidies than on those for
renewable energy.
“Since fossil fuel prices are heavily
subsidised, renewable energies have to compete with a low price
fossil fuel energy production, which is definitely unfair,” Birol
said.
By 2020, the IEA expects global fossil fuel consumption
subsidies to reach
target=”_blank”>$660 billion, or 0.7% of global GDP.
If the aid was phased out, growth in energy demand would be cut
by 4.1%, oil demand would fall by 3.7 million barrels a day and CO2
emissions would be cut by 1.7 Gigatonnes.
Some developing world economies are unenthusiastic about
removing aid to money-spinning fossil fuel industries that are
trying to compete with their already well-established (and
previously subsidised) Western counterparts.
Ending subsidies
Christopher Burghardt, the Vice President of a leading US solar
energy firm, First Solar, said that the issue for him was “less
about levelling [fossil fuel] subsidies than ending them”.
“Such a step would be a critical one on the way to an
electricity market in which renewable and traditional generation
can compete on a level playing field,” he added
In an interview with EurActiv earlier this year, Achim Steiner,
the executive director of the United Nations Environment Programme
also argued that state aid to fossil fuel industries was
incentivising greenhouse gas emissions.
“If you remove those subsidies, other power-producing
technologies for electricity and mobility will quickly make their
way into the market,” he said.
Source: www.euractiv.com
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