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  • bluecheese4u bluecheese4u Feb 8, 2013 7:02 AM Flag

    IEA chief: 'Fossil fuel subsidies are public enemy number one for green energy'

    IEA chief: 'Fossil fuel subsidies are public enemy number one for green energy'

    Fatih Birol says it does not make sense for governments to promote renewables at the same time as subsidising coal, oil and gas

    By Jessica Shankleman, in Vienna 04 Feb 2013 More from this author Comments: 3

    The International Energy Agency's (IEA) chief economist has today again urged governments around the world to end the $0.5tr of annual subsidies given to oil and gas production, while also warning that policy instability has become the greatest challenge facing renewable energy markets.
    Speaking to delegates at the annual European Wind Energy Association (EWEA) conference in Vienna, the IEA's Dr Fatih Birol described fossil fuel subsidies as "public enemy number one" for the production of sustainable energy.

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    Figures from the IEA show that global fossil fuel subsidies jumped to $523bn in 2011, which Birol said represented an incentive to emit carbon equivalent to $110 per tonne.
    In contrast, the EU emissions trading system currently provides a disincentive to emit carbon of less than $10 per tonne.
    Analysts argue that the bulk of fossil fuel subsidies are found in developing and emerging economies, but Birol has consistently maintained that huge subsidies and tax breaks are tilting the global energy market in favour of fossil fuels.
    "On one hand these countries talk about renewable energy, efficiencies and climate change, and at the same time subsidises fossil fuel energy - [it] does not make sense," he said. "All the countries and governments of the world need to pay attention to this issue.
    "In the presence of these fossil fuel subsidies... we have no chance whatsoever to meet these climate change targets and provide room for renewable energies to compete with coal, oil and gas as they are artificially cheap as a result of those subsidies."

    In response to critics who claim wind power and other renewables are too intermittent and unpredictable to be a reliable energy source, Birol argued that political unpredictability rather than technical challenges was the greatest barrier facing green energy markets.
    "My message to governments is that if their policies are as predictable as the availability of wind, we will win this game," he said.
    Answering questions from BusinessGreen, Birol said he had little optimism any country would scrap fossil fuel subsidies in the near to medium future, particularly following a recent spike in oil prices as a result of the Arab Spring.
    "Before the Arab Spring, there was among some countries in the Middle East and North Africa an appetite for fossil fuel subsidy reduction but I'm afraid this appetite is not there anymore," he said. "Some countries like Russia, India did make some progress. But overall, if there is no major push, I don't expect a major change in these policies."
    He also criticised those countries in the Middle East, Asia and Latin America that claim fossil fuel subsidies are key to boosting development.
    "They claim that people need fossil fuel subsides to help the poor, but our analysis shows that only eight per cent of this half a trillion dollars goes to the 20 per cent of the lowest income levels and the remaining 80 per cent goes to middle and higher income levels," he said. "So it doesn't help development."
    The comments come on the same day as a new analysis from Friends of the Earth revealed that British Chancellor George Osborne has handed oil and gas firms tax breaks worth nearly £1bn, despite the government's stated support for phasing out fossil fuel subsidies.


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