Fossil Fuel Subsidies Expanding Despite Global Climate Talks: A Call for Clean Energy Transition

The global climate talks in Dubai, known as COP28, saw nearly 200 countries agree to transition away from fossil fuels and phase out subsidies. Yet, new data reveals that fossil fuel subsidies are not receding but expanding, reaching a record $7 trillion globally in 2023, according to the Environmental and Energy Study Institute (EESI). This expansion is despite the urgent calls for climate action and the increasing recognition of the harmful health impacts of fossil fuels.

A Closer Look at US Fossil Fuel Subsidies

In the U.S., the fossil fuel industry has received an eye-watering $757 billion in incentives, most of which were implicit and led to environmental degradation. EESI President Daniel Bresette called into question whether these subsidies make production easier or more profitable, highlighting the net loss for the U.S. government from oil and gas subsidies.

Despite President Biden's pledges, fossil fuel subsidies have not been eliminated. However, his administration is taking steps through legislation and the federal budget to reduce them and increase incentives for clean energy projects. The proposed changes in the federal budget aim to reduce the deficit and support clean energy initiatives, including tax credits for methane emission reductions and carbon capture projects.

Fossil Fuel Subsidies vs. Clean Energy

The debate over what constitutes a subsidy continues. Experts like Mike Johnson have discussed the shifting incentives away from fossil fuel development. The call to transition fossil fuel subsidies to the clean energy sector was supported by influential climate catalysts like Danielle Fugere, who emphasized the decreasing costs of renewable resources.

The Investment in Infrastructure and Jobs Act (IIJA) and the Individual Retirement Account (IRA) have offered substantial incentives for clean energy projects, creating demand and a clear path for the clean energy transition. Furthermore, the 2024 budget proposal includes funding for climate adaptation and clean technology.

Global Efforts Towards Clean Energy

Internationally, efforts are also being made to accelerate the transition to clean energy. Over 80 countries are pushing for a broader pact to phase out all CO2-emitting fossil fuels. The issue of climate finance, the mobilization of financial resources from developed to developing countries to help them mitigate and adapt to climate change, was also discussed.

Elsewhere in Europe, energy analyst Andreas Schröder from ICIS argues that the German government should prioritize tackling the country’s system of fossil fuel taxes instead of relying on subsidies for climate action. He emphasizes the need for appropriately taxing fossil fuel use or electricity to promote cheap and clean energy for all.

Investing in Green Industries

In France, the European Commission has approved a €2.9bn ($3.2bn) subsidy plan for supporting investment in green industries under the framework of the EU’s Green Deal Industrial Plan. The French scheme provides tax credits for investment in green industries, demonstrating a practical approach to supporting sectors crucial for accelerating the green transition and reducing fossil fuel dependencies.

As the world grapples with the pressing need to mitigate climate change, the expansion of fossil fuel subsidies presents a paradox. It is time for governments and policymakers worldwide to heed the call for a transition to clean energy and invest in a sustainable future for all.