Energy Subsidies and the Environment

Environmental Harmful Energy Subsidies, -and How to Phase Them Out?
 OECD, UN-ECE; the EU Sustainable Developemnt Strategy, and Several International Meetings
has Called for Phase Out, Probably in 2005

By Rob Bradley,
Climate Network Europe

Energy subsidies are everywhere!

Can we even evaluate them?
• OECD consistently avoids investigating its own subs, while examining those from developing countries
• Greenpeace estimates €15 billion per year in EU to coal and nukes (1997)
• Estimated $30 billion per year in new subsidies in Bush Administration energy plan.
 

Types of subsidies

• Direct payments to producers (e.g. German coal)
• Indirect support through finance/ avoided costs (e.g. nukes insurance)
• Assistance in 3rd countries (e.g. Export Credit Agencies)
• Environmental externalities
 
 

Direct subsidies

• Coal is major recipient (ca €10 billion per year in EU, Greenpeace 1997)
• €4.65 billion German coal in 1998, aim for €2.65 by 2005.
• That’s €86,000 per miner per year!
• Supported typically for social/ security of supply reasons
• Germany & Spain main spenders in EU
 
 

Indirect subsidies

• Can take many forms
• Nuclear industry does not insure itself against accident risk
•  Nuclear waste management
• Public sector financing
• Details often impossible to discover
 

Third country subsidies

• Export credits average $80-100 per year, of which over half is in energy or high-emitting sectors
• International Finance Institutions also lend to conventional energy on large scale
• While lecturing developing countries on subsidies, rich country companies are subsidised to produce (or exploit) this energy
 

Environmental externalities

• Few countries yet have accounting for environmental impacts of conventional energy
• In some cases these are very significant, but very hard to quantify
• Dangerous to get sucked into number-crunching on e.g. nukes
 

Current issues

• OECD self-evaluation needed
• Commission attacking renewables subsidies while allowing conventional ones
• Sensitivity needed to impact of subsidy removal
• Developing country impacts most serious