Fuel subsidies dwarf climate efforts

11 April 2013

The global cost to developing country governments of subsidising fuels such as gas and oil is over $396 billion a year – 75 times higher than the $5 billion received by the same governments to combat the effects of climate change.

The eye-opening figures published today in a new ODI report 'At cross purposes' present a clear wake up call to a climate community which is accused of ‘throwing green money after brown’ when it comes to acknowledging the scale of the public policy challenge they face.

The report also reveals that five countries; China, Egypt, India, Indonesia and Mexico appear in both the list of top 12 recipients of climate finance and the list of top 12 providers of fossil-fuel subsidies to domestic consumers.

Report author Shelagh Whitley said:

“There is a real risk that the international community is  throwing green money after brown by pursuing project based approaches to a problem that requires a far more catalytic effort. There is an enormous challenge to be met and the current approach risks being as effective as sticking a plaster on a broken leg.

$5billion is not a small amount of money and it can make a real difference but we need to assess how it is spent. At the moment there are too many people supporting a piece-by-piece project based approach to a problem that is far greater than the sum of its parts.

Fossil fuel subsidies are just the beginning of a long list of subsidies that Government’s provide which can be seen to skew the field against green investment.

We need to ask ourselves what it is that can persuade policymakers in London, Beijing and Delhi of the need for long term solutions that overcome the short-term political temptations of subsidies.”