The fossil fuel industry receives billions of dollars in subsidies ever year, but how long can this continue?
The fossil fuel industry is one of the largest in the world, and it receives its fair share of institutional support from governments worldwide. According to a report from the New York Times, however, the days of government subsidies for the fossil fuel industry may be numbered.
Representatives from almost 200 countries met in Paris this month to try and reach an agreement on how to reduce greenhouse emissions and avoid the most catastrophic impacts that climate change threatens to bring. Fossil fuels are the largest manmade source of greenhouse gases, and people around the world have spoken out against their continued and unfettered use due to the climate risks they pose.
A group of 20 industrialized nations met in 2009 an agreed to begin phasing fossil fuel subsidies out within the coming decades. According to the International Energy Agency, had this agreement not been made, the $490 billion given out to fossil fuel companies around the world that year may have been closer to $610 billion.
Despite this progress, the IEA thinks there is still more that can be done. The agency cited slashing subsidies as one of the most effective methods of curbing greenhouse gas emissions. Faith Birol, the IEA’s executive director, says that subsidies are “public enemy number 1 in terms of sustainable development.”
Why do fossil fuel companies get so much help from the government if they form one of the most profitable industries in the world? The answer, the New York Times argues, is that they help keep fuel prices low for consumers. In Venezuela, for example gasoline costs roughly 2 cents per gallon. Oil-producing nations see some of the biggest subsidies on the planet.
The United States hasn’t been keen on subsidizing fuel costs for citizens, but they certainly offer a lot of help to drilling and exploration companies. Given the country’s recent boom in oil production, spending in the fossil fuel industry reached record levels.
A recent press release from the International Energy Agency outlining recent studies on fossil fuel subsidies and the effect of fossil fuels on the climate can be found here.