As gasoline prices scale new highs the OECD has published a research note saying it expects fossil fuel subsidies to surge, jeopardizing government’s net zero pledges and potentially crowding out investment in sustainable energy infrastructure and other public services.
“The world urgently needs a surge in investment in clean energy technologies and infrastructure, and phasing out fossil fuel subsidies is one of the essential conditions to make that happen,” said IEA Executive Director Fatih Birol. “Governments should be planning for a cleaner and fairer energy future in which everyone benefits from modern energy services.”
According to OECD data covering 81 economies fossil fuel subsidies have tracked oil prices the last ten years, reaching a high of almost $775 billion in 2012 as prices surged to over $100 per barrel an declining to $351 billion in the 2020 slump in which oil reached prices as low as $20 per barrel.
Of 2018 subsidies $317 billion went to petroleum, $176 billion went to electricity, $127 billion to natural gas and $69 billion went to coal. The US spent $27 billion in fossil fuel subsidies in 2020 and Canada $89 billion of which respectively $12 billion and $45 billion went to petroleum products.
Worldwide subsidies are largely concentrated in Europe and the Middle East.