SUBSIDIZING DESTRUCTION

"there is something unbelievable about the world spending hundreds of billions of dollars annually to subsidize its own destruction."

Each year the world's taxpayers provide an estimated $700 billion of subsidies for environmentally destructive activities, such as fossil fuel burning, over-pumping aquifers, clear-cutting forests, and overfishing.

An Earth Council study, Subsidizing Unsustainable Development

The World Bank reports

• if Iran’s $3.6-billion annual subsidy were phased out, Iran's carbon emissions would reduce by a staggering 49 percent.

• that removing energy subsidies would reduce carbon emissions in Venezuela by 26 percent, in Russia by 17 percent, in India by 14 percent, and in Indonesia by 11 percent.

• Belgium, France, and Japan have phased out all subsidies for coal.

• Germany reduced its coal subsidy from $5.4 billion in 1989 to $2.8 billion in 2002, lowering its coal use by 46 percent. It plans to phase out this support entirely by 2010.

• China cut its coal subsidy from $750 million in 1993 to $240 million in 1995.

UK Aviation’s Economic Downside

• $17 billion in tax breaks, including a total exemption from the federal tax.

• External or indirect costs (not paid), such as treating illness from breathing the air polluted by planes, the costs of climate change, and so forth, add nearly $7 billion to the tab.

• The subsidy in the United Kingdom totals $391 per resident.

• a substantial share of the U.K. population cannot afford to fly very often if at all

A study by the U.K Green Party
USA oil and gas industry

the United States has been increasing its support for the fossil fuel and nuclear industries

from 1992 to 2002 subsidies for the energy industry totaled $33 billion

the oil and gas industry got $26 billion, coal $3 billion, and nuclear $4 billion.

A Green Scissors a coalition of environmental groups report from 2002

A world facing the prospect of economically disruptive climate change, for example, can no longer justify environmentally destructive subsidies to expand the burning of coal and oil.

Shifting these subsidies to the development of climate-benign energy sources such as wind, solar, biomass, and geothermal power is the key to stabilizing the earth's climate. Shifting subsidies from road construction to rail construction could increase mobility in many situations while reducing carbon emissions.

At a time of mounting public concern about climate change driven by the burning of fossil fuels, the world fossil fuel industry is still being subsidized by taxpayers at more than $210 billion per year.

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Many subsidies are largely hidden from taxpayers.

• the fossil fuel industry subsidies include a depletion allowance for oil pumping in the USA. military expenditures to protect access to Middle Eastern oil cost $30 to $60 billion a year,

• the oil imported from the region was worth only $20 billion. the Rand Corporation

• U.S. taxpayers subsidize automobile use at $257 billion a year, or $2,000 per taxpayer.

• In addition to subsidizing carbon emissions, this also means that taxpayers who do not own automobiles, including those too poor to afford them, are subsidizing those who do.

A 2001 study by Redefining Progress

To subsidize the use of fossil fuels is to subsidize crop-withering heat waves, melting ice, rising seas, and more destructive storms. Perhaps it is time for the world's taxpayers to ask if this is how they want their hard-earned money to be spent.
Adapted from Chapters 4 and 12 in Lester R. Brown, Plan B 2.0: Rescuing a Planet Under Stress and a Civilization in Trouble (New York: W.W. Norton & Company, 2006), Lester R. Brown http://www.earth-policy.org

”for every dollar that's spent in this Australian Federal Budget to tackle climate change, $10 are still spent on activities that promote greenhouse pollution."

DON HENRY, AUSTRALIAN CONSERVATION FOUNDATION http://www.abc.net.au/7.30/content/2007/s1917928.htm

in an average year the Australian Government subsidises

coal, oil and gas companies to the tune of about $9 billion

Renewable industries like solar and wind received only $330 million.

A study commissioned by Greenpeace

http://www.abc.net.au/news/newsitems/200704/s1910116.htm

We need to stop financing the problem and start financing the solutions! Re-directing all fossil fuel subsidies to renewable is the most effective measure for fast and effective change. Since renewable energies create more jobs per dollar than fossil fuel industries, this is also going to create more jobs.

Please ensure that any politician you intend to vote for will commit to stop subsidising the problem.

In Australia, new research from the Institute of Sustainable Futures at the University of Technology in Sydney, shows as much as $10 billion government subsidies were given to the coal, oil and gas sectors in 2005 - 2006

In 2006-07, the Government spent around $280 million on climate change programs.

In 2006-07 payments or tax incentives to directly subsidise the production or consumption of fossil fuels totalled at least $6 billion.

For every dollar spent trying to reduce or mitigate climate change, we spent another $20 rewarding the activities that caused the problem.

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Rewarding pollution

• Every year, the Federal Government spends billions of dollars, directly and by way of tax breaks, to support activities that damage the environment.

• This distorts behaviour by encouraging excessive energy and fuel use, while discouraging cleaner alternatives.

• In 2007-08, the whole-of-government budget for climate change initiatives is $496 million (including $80 million in underspend on climate programs carried forward from 2006-07).

• Payments or tax incentives that directly subsidise the production or consumption of fossil fuels total at least $6 billion annually. http://www.acfonline.org.au

petroleum exploration subsidies

Tax concessions for petroleum exploration subsidise increased levels of exploration and production and keep costs lower than they would otherwise be. This keeps the price of petroleum fuels lower than it would otherwise be, encouraging greater use of fossil fuels, which is environmentally harmful.

The following special deductions (from company tax) are available for companies involved in petroleum exploration and development activities (DITR, 2002):

• immediate deduction of petroleum exploration and prospecting expenditures;

• immediate deduction of operating costs;

• immediate deduction of capital and current environment protection expenditures (except for plant

subject to depreciation) on pollution control or waste management;

• a deduction for Environment Impact Statement capital costs over ten years or the life of the project, whichever is the lesser;

• immediate deduction of certain mine-site rehabilitation costs including expenditure associated with the removal of offshore platforms; and

• deductions for exploration and allowable capital expenditure are deductible without limit, with any excess to contribute to a tax loss for the year.

Subsidies that Encourage Fossil Fuel Use in Australia Working Paper CR2003/01 12

A legislated 25 per cent by 2020 renewable energy target combined with energy efficiency measures in Australia is estimated to deliver $33 billion in new investment and 16,600 new jobs.

Currently more than 17,000 Australians are employed in renewable energy or energy efficiency, despite relatively poor Federal Government support for these areas.

There is a hole in Australia's renewable energy support portfolio:

• lack of substantial long term R&D support of a kind that can be used to invent and commercialise the renewable energy technologies that could make major contributions to powering the world from 2012 and beyond.

• The relative scarcity of R&D funding for renewable energy in Australia is creating major

• difficulties for universities and other research organisations engaged in renewable energy R&D.

• It has led to major reductions in renewable energy research group size and numbers, difficulties in

• translating research into commercial outcomes and movement of innovative technology offshore.

Proposition: that funding of $400 million over 5 years be made available for renewable energy

R&D in Australia. A tax of $0.20 per tonne of CO2 from fossil fuels could provide this funding,

and would add about 0.1% to the retail price of electricity. B1g_s4.3

Lack of Funding for energy innovation in Australia

As of 2008 there will be no dedicated renewable energy R&D agency to which Universities can apply.

Renewables Federal Government support for energy R&D

• Asia-Pacific Partnership on Clean Development and Climate ($40m for renewables; will be exhausted in 2007)

• Renewable Energy Development Initiative REDI ($100m over 7 yrs). Universities, which have been powerhouses for renewable energy innovation, cannot apply.

• National Information Communication Technology Australia (NICTA): $60m/y

• Fraunhofer Institute for Solar Energy Systems (a German research group): $47m/y

Nuclear

• Australian Nuclear Science and Technology Organisation (ANSTO): $127m per year (mostly not for nuclear energy)

• The National Collaborative Research Infrastructure Strategy (NCRIS) is a major initiative under the Government’s Backing Australia’s Ability - Building our Future through Science and Innovation to provide researchers access to the infrastructure and networks necessary to undertake world-class research will deliver ~$50m in infrastructure to fossil fuels.

• Rio Tinto Foundation ($35m no-interest loan from the Federal Government)

• Australian Nuclear Science and Technology Organisation (ANSTO): $127m/y

Andrew Blakers- Australian National University http://www.aph.gov.au/house/committee/Isr/renewables/submissions

In 1994, an estimated $180 million was provided for energy R&D, of which only $27 million (15 per cent of the total) was provided to renewable energy and energy efficiency applications. (NIEIR, 1996).

Expenditure by private companies on R&D can be claimed as a deduction against company tax at a concessional rate of 125% of expenditure.

Australia’s flagship research organisation, Commonwealth Scientific and Industrial Research Organisation (CSIRO) ,in 2001-02 ~ approximate funding for energy sector and petroleum sector R&D was $30 million and $20 million respectively.

A brief review of CSIRO’s energy sector research indicates that five of the nine energy research areas directly support fossil fuel production or consumption.

Estimates of global fossil fuel subsidies range from $US151 billion to $US235 billion per year

(de Moor, 2001, UNEP and IEA, 2002).

An IEA study found : subsidy removal in eight non-OECD countries could increase GDP of those countries by almost 1% and lower CO2 emissions by 16% (IEA, 1999).

If fossil fuel subsidies exist in Australia,it would be reasonable to assume that their removal would have similarly positive impacts. ttp://www.isf.uts.edu.au/publications/CR_2003_paper.pdf

The biggest and most immediate step we can take in the right direction is to stop subsidising the problem

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