Worldwide Oil Subsidies Could Top $500 Billion

Joanna Schroeder

Last September, the G-20 leaders announced during an event in Pittsburgh, that they are committed to phasing out controversial fossil-fuel based subsidies. According to the Global Subsidies Initiative, the G-20 leaders blame subsidies for encouraging wasteful consumption and undermining efforts to combat climate change. Referencing studies by the Organization for Economic Cooperation and Development (OECD) and the International Energy Agency (IEA), the G-20 said that “eliminating fossil fuel subsidies by 2020 would reduce greenhouse gas emissions in 2050 by ten percent.”

Last month, the preliminary report was released, “Analysis of the Scope of Energy Subsidies and Implementation of Phasing Out” written by researchers from the International Energy Association (IEA), World Bank, the Organization of Petroleum Exporting Countries (OPEC) and the Organisation for Economic Co-operation and Development (OECD). The report has found that the world could spend in excess of $500 billion each year to subsidize fossil fuels.

In response to this early draft, Tom Buis, with Growth Energy, an organization that represents the US ethanol industry said, “This study confirms what millions of Americans have known all along. Our addiction to oil has a devastating impact on our nation’s economy and energy security, as well as that of nations around the world. By increasing the production of domestic, renewable ethanol, we will not only enhance U.S. national security and green our environment but dramatically reduce the transfer of wealth that occurs today, keeping more money and jobs here at home at a time when it is needed most.”

Buis concluded, “Further, by learning many of the agricultural innovations that the U.S. uses today for farming and ethanol production, developing nations can benefit from both food and fuel production, helping them to become more energy independent and grow their economies.”

Ethanol, Growth Energy, Oil