Wow, I agree with the International Monetary Fund (IMF) on something!
The IMF have come out strongly against fossil fuel subsidies, saying that they are threatening both the environment and the stability of the global economy. The IMF has calculated around $1.9 trillion worldwide, or 8 percent of Government revenue is spent on energy subsidies the vast majority of these contributing to climate change.
The paper has included the negative health and environmental externalities of fossil fuel consumption in the total of $1.9 trillion, and states that fossil fuel subsidies are now growing so large that they’re destabilising economies. Other estimates such as the International Energy Agency have put fossil fuel direct subsidies at $623 billion and others have put it at $1 trillion, but what’s clear is when you also account for externalities our fossil fuel addiction comes at a huge cost.
IMF First deputy Managing Director David Lipton said that removing the subsidies would strengthen incentives for ‘research and development in energy-saving and alternative technologies’ and has the potential to reduce global emissions by 1-2 percent.
This is a huge issue for our economy and our climate. I was heartened to see last year that the New Zealand Government came out at the Rio+20 summit supporting the reform of Fossil Fuel subsidies.
However, I think that the Government has a pretty loose take on what amounts to a fossil fuel subsidy and is a case of the pot calling the kettle black. While they call on countries to end consumption end subsidies, they also claim that they do not subsidise fossil fuels in New Zealand. If you look at how the Government directly and indirectly helps out the oil and gas industry it quickly adds up. The National Government has given away free seismic information costing tens of millions of dollars, funded overseas promotion trips and reports; ‘generously’ has the forth lowest royalty plus tax rate in the world and has pages and pages of tax exemptions. Then there is the $1 billion plus annual cost to taxpayers of picking up the carbon tab under the National Government’s woeful Emissions Trading Scheme.
It’s time instead that we invested in clean energy and clean jobs and levelled the playing field for renewable energy and a sustainable and more prosperous New Zealand.