10 Fossil Fuel subsidies
96. Sir David King stated in his written evidence
that the removal of fossil fuel subsidies was a "clear opportunity"
for incentivising countries to move to a "low-carbon pathway".
Quoting International Energy Agency (IEA) statistics, Sir David
explained that "fossil-fuel consumption subsidies amounted
to US$409 billion worldwide in 2010 [...] global renewable energy
subsidies were US$66 billion". He added that the removal
of fossil fuel subsides could "decrease primary energy demand
by around 5%" and CO2 emissions by 5.8%"
by 2035.[136]
97. The IEA defines an energy subsidy as "any
government action directed primarily at the energy sector that
lowers the cost of energy production, raises the price received
by energy producers or lowers the price paid by energy consumers".[137]
Consumption subsidies benefit consumers by lowering the prices
they pay for energy, and are more prevalent in non-OECD countries
such as Iran, Russia, Saudi Arabia, India and China. [138]
98. While some fossil fuel subsidies are in place
globally as a package of policies intended to relieve fuel poverty,
many are in place for everyone in the general population to benefit
from and have become embedded.[139]
DECC made the point that removal of these subsidies will have
a different effect in some economies compared to others. In a
country such as India the subsidies are often about supporting
the poorest to access energy. However, there are "there are
obviously economies where there is not such a big impact as there
would be".[140]
99. We accept
that in some countries fossil fuel subsidies help to alleviate
fuel poverty. However these subsidies are not confined to countries
where that is the case so we recommend that the Government strongly
support pro-poor interventions that would raise the standard of
living for the poorest whilst enabling fossil fuel subsidies to
be eliminated, particularly in developed countries.
136 Ev 82 Back
137
IEA, World Energy Outlook 2011, 9 November 2011, p 509 Back
138
IEA, World Energy Outlook 2011, 9 November 2011, p 509 Back
139
Q 120 Back
140
Q 230 Back
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