Obama to Press G20 Leaders to Cut Fossil Fuel Subsidies That Benefit Big Business


"In the last six years, oil and coal producers got $72bn in tax breaks compared with $29bn for renewable energy."

Obama, who will host the summit in Pittsburgh, will propose a gradual elimination of the tax breaks, cheap loans and other measures extended to oil, gas, coal and electricity producers. The White House said elimination of the subsidies would be a "significant down payment" to ending global warming.

Studies from the IEA and OECD have estimated that carbon saving of ending subsidies would be 10% by 2020.

But an end to the subsidies would bring world leaders into conflict with powerful fossil fuel lobbies, as well as developing nations where the subsidies make fuel affordable. Over the past six years, U.S. oil and coal producers received more than double the subsidy of renewable energy companies.

The world's biggest polluters—America, India, China, Brazil and Russia—all offer significant subsidies, totaling many billions of dollars every year, which encourage the use of fossil fuel. OECD and IEA studies also found that last year, countries who subsidized fossil fuel increased their consumption by 1barrels of oil and in countries without subsidies, consumption fell by 1.5m barrels.

Another OECD report last week noted that removing the subsidies would free up cash for programs that could help the poor. "Removing environmentally harmful subsidies would be an important first step," the OECD secretary-general Angel Gurría said. "It would also improve economic efficiency. For instance, the budgetary savings could be used to reduce other distorting taxes or to alleviate poverty in a more targeted and efficient way."

Obama has already faced multimillion dollar lobbying campaigns against his proposals to force cuts in U.S. greenhouse gas emissions.

The U.S. government has consistently offered more tax breaks and other incentives to the oil and gas industry—rather than producers of renewable energy—undermining efforts to reduce greenhouse gas emissions. In the last six years, oil and coal producers got $72bn in tax breaks compared with $29bn for renewable energy, said a report from the Environmental Law Institute.

The U.S. administration wants to phase out the blanket programs that benefit big business and the wealthy. It would maintain subsidies for cleaner technology, like carbon capture storage from coal plants.

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