G20 Spends ‘Shocking’ $452 Billion Per Year on Fossil Fuel Subsidies
G20 countries spend US$452 billion per year on fossil fuel subsidies, including C$3.6 billion in Canada and US$2.5 billion in the United States, despite a 2009 pledge to phase the subsidies out, according to a report released yesterday by Oil Change International and the Overseas Development Institute.
“It’s quite a shocking amount. I think we were surprised the scale of the subsidies is so great,” said Oil Change senior campaigner and report co-author Alex Doukas. “We’re subsidizing companies to search for new fossil fuel reserves at a time when we know that three-quarters of the proven reserves have to stay in the ground if we hope to avoid the worst impacts of climate change.”
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The report points to Canada as both a leader and a laggard in the effort to phase out fossil fuel subsidies that exceed $10 million per minute world-wide. “A number of subsidies to oil, gas, and mining companies are in the process of being phased out, including special help for the oilsands that ended in January 2015,” McDiarmid writes. “On the other hand, this country has ramped up taxpayer help for the fledgling liquefied natural gas (LNG) industry.”
Oil Change and the ODI say G20 fossil subsidies are three times higher than government support for renewable energy, a finding that “calls into question the commitment of governments to an ambitious deal on climate change.”
The Canadian Association of Petroleum Producers told CBC that government support is crucial to the fossil industry’s success, claiming tax deductions for resource exploration and development don’t count as subsidies.
“Instead, they are part of the fiscal framework intended to provide a globally competitive investment regime that attracts investment, creates jobs, generates government revenues, and benefits all Canadians,” wrote CAPP spokesperson Chelsie Klassen.
“Compared to other industries, the petroleum industry is up-front and capital-intensive,” she added. “Significant sums of money need to be spent on exploration and development before revenues begin to be realized.”