G20 countries allocate $88bn annually for fossil fuel exploration
The world’s leading economies spend about $88 billion each year supporting companies exploring oil, gas, and coal, which is twice the amount energy companies invest themselves, according to a new report.
The spending is despite evidence that two thirds of existing reserves cannot be exploited “if the world is to avoid dangerous climate change,” says the report by the Overseas Development Institute (ODI) and Washington-based analysts Oil Change International.
Britain, Australia, Russia and the US have some of the highest national subsidies, says the report, pointing particularly to last year when Washington provided $5.1 billion for fossil fuel exploration, which is almost twice as much as in 2009.
"Levels of support range from $2 billion to $5 billion in Russia, Mexico and India, to $9 billion in China, $11 billion in Brazil, and $17 billion in Saudi Arabia," the report said.
The $88 billion is almost twice the International Energy Agency (IEA) estimate of what is needed annually to provide universal heat and electricity access by 2030. It’s also more than twice the $37 billion annual investment of the top 20 oil and gas companies.
The study also notes that exploration money is a drop in the ocean of total fossil fuel subsidies, which is estimated to range from $500 billion to $1.9 trillion.
The World Bank, the OECD, the IMF, and the IEA have all called for the phasing out of fossil fuel subsidies; with the IEA due publish its latest estimates as part of the World Energy Outlook report on Wednesday.
The G20 group of countries committed in 2009 to phase out inefficient subsidies for oil and other fossil fuels and reiterated that pledge in 2013. But there has been little progress. The governments have been hampering transparency and efforts to agree an international emissions reduction treaty.
"Five years ago, G20 governments pledged to both phase out fossil fuel subsidies and take action to limit climate change,"said Stephen Kretzmann, director of Oil Change International. "Immediately ending exploration subsidies is the clearest next step on both fronts."