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The darkside of energy subsidies -- a planet held hostage by its appetite for fossil fuels

By Catholic Online (NEWS CONSORTIUM)
5/1/2014 (3 years ago)
Catholic Online (

Energy subsidies are unnecessary, expensive, and the world is addicted to them.

New reports show that fossil fuels are the most subsidized industries around the world. A report by the BBC blasts this reality, explaining that the industries are hardly "in need of a helping hand."

Energy subsidies send trillions per year up in smoke.

Energy subsidies send trillions per year up in smoke.


By Catholic Online (NEWS CONSORTIUM)
Catholic Online (
5/1/2014 (3 years ago)

Published in Green

Keywords: Energy, subsidies, addiction, costs, infrastructure

LOS ANGELES, CA (Catholic Online) - Reports from the International Energy Agency (IEA) reports that over half-a-trillion dollars were spent on fossil fuel subsidies in 2012. The International Monetary Fund (IMF), which looks at government subsidies for producers (instead of consumers) says that they received nearly $2 trillion in subsidies.

Meanwhile, the fossil fuel industry remains one of the most profitable industries on the planet generating legendary amounts of wealth.

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The BBC reports that fossil fuels are about 80 percent of our consumption, but that they contribute to greenhouse gas emissions and other harms.

The subsidies, according to the BBC, come in various forms. For example, some subsidies keep the costs of fuel down which encourages consumption. Other subsidies are paid to producers, making it profitable for them to pursue supplies of fossil fuels that would otherwise be unprofitable.

The problem with subsidies is threefold. First, the wealthy benefit the most from subsidies while the poor, who usually lack access to electricity and automobiles, benefit the least. Second, subsidies burn enormous amounts of government wealth on artificially manipulating prices and competition. Although the short-term gains are great, the long-term consequences could prove more severe. Finally, by encouraging consumption of fossil fuels the entire scheme contributes to carbon emissions and global warming.

The problem for governments is that subsidies are very popular with the people, despite their enormous costs. In half of all nations, the energy sector is controlled by the government. All fuel prices are manipulated by governments in a variety of ways including taxes on fuel. Large segments of the population are employed in the energy industries and most people are very sensitive to price shocks.

Any disruption to the status quo is typically met with public protests and can be politically expensive for elected officials. This makes it especially difficult for governments to impose new taxes on energy or to reduce subsidies.

Finally, many nations which manage their own energy production lack the ability to update their infrastructure, which means diminishing returns over time.

The subsidies paid to energy companies usually means there is less money for healthcare, education, and other infrastructure projects.

The BBC admits that while fossil fuel subsidies may go away, they will "be with us for a very long time" and getting rid of them will require massive global political effort.


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