Fossil fuel subsidies on the increase

Fossil fuels are set to be subsidised to the tune of $660 billion by 2020 unless reforms are made to eliminate state aid for the industry, warns the International Energy Agency. Subsidies have increased dramatically in the last few years with $409 billion in 2010, compared to $312 billion in 2009.

"In a period of persistently high energy prices, subsidies represent a significant economic liability," according to World Energy Outlook, its annual publication.

The rate has slowed slightly due to an effort to curb subsidies in countries like India, China and Russia, but rates in Middle East countries are rising to compensate. The G20 conference in 2009 agreed to phase out subsides for fossil fuels, but a more worldwide solution may be required from here to stem the tide.

In the US, the Obama administration has proposed that it will cut around $4billion / year of subsidies, although even after the gulf spill crisis it has still been treading water on the issue. The problem is that of rising fuel prices, something oil and energy companies can scare the voters with.

A study of the period 2002-2008 by the Environmental Law Institute found that over $70 billion was spent on fossil fuel subsidies in the period, $16.8 billion on corn ethanol, $12.2 billion on traditional renewables and $2.3 billion on carbon capture and storage. This shows a budget a far cry from the forward thinking green economy the world needs to approach the new century. Subsidies have to end if we are to reduce greenhouse gas emissions from the energy sector.