OECD urges end to policies which support fossil fuels

World should abandon fossil fuel support policies which belong in a past when healthy economies depended on pollution, say wealthiest nations.

The club of the world’s richest countries, the Organisation for Economic Co-operation and Development (OECD), says the world needs to abandon the harmful and outdated policies which support fossil fuels.

In a report published with its inventory of the support they enjoy, the OECD says this is hampering global efforts to curb greenhouse gas (GHG) emissions and combat climate change.

The report describes the burning of fossil fuels as a leading contributor to climate change” and warns against complacency, saying global GHG emissions are still largely above the levels required for limiting average expected temperature increases” to safe levels. It says the fuels also make mitigation more costly than necessary.

Government support for the consumption and production of the main fossil fuels – coal, oil and gas – in OECD countries and key emerging economies is running at US$160-200 billion annually, the OECD says.

The inventory reviews almost 800 spending programmes and tax breaks which are used by governments in the 34 OECD countries and six key emerging G20 economies (Brazil, China, India, Indonesia, Russia and South Africa) to encourage the consumption or production of fossil fuels.

Governments are spending almost twice as much money supporting fossil fuels as is needed to meet the climate finance objectives set by the international community, which call for mobilising US$100 bn a year by 2020.

Angel Gurría, OECD secretary-general

Dual support

These include measures that cut prices for consumers and those that lower the exploration and exploitation costs for oil and gas companies.

The time is ripe for countries to demonstrate they are serious about combating climate change, and reforming harmful fossil fuel support is a good place to start, says OECD secretary-general Angel Gurría.

Governments are spending almost twice as much money supporting fossil fuels as is needed to meet the climate finance objectives set by the international community, which call for mobilising US$100 bn a year by 2020.

We must change the course. This new OECD inventory offers a roadmap to turn around harmful policies that are a relic of the past, when pollution was still seen as a tolerable side effect of economic growth.”

Around two-thirds of the measures identified in the inventory were introduced before the year 2000, in a different economic and environmental context. The OECD argues that changing policy priorities make it necessary for governments to rethink the relevance and effectiveness of policies that use taxpayers’ money to sustain reliance on fossil fuels.

Support still high

It says the inventory shows that, while slight progress has been made over the past three years, total support for fossil fuels remains high, reinforcing the need for sustained reform efforts.

The OECD believes lower oil prices present a unique opportunity for governments to phase out support for fossil fuel consumption and production.

But some industry leaders insist that, far from needing to phase out fossil fuels, the world is going to rely on them even more. Ben van Beurden, the head of the oil giant Shell, which plans to drill in the Arctic, told the Financial Mail on Sunday:

The amount of energy we consume is going to double in the first half of the century so we will have to supply twice as much as we do today as an industry. Most renewables produce electricity, and electricity is just 20 per cent of the energy mix. Where is the other 80 per cent going to come from?

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