5 December 2011: The International Renewable Energy Agency (IRENA) and the International Institute for Sustainable Development (IISD) have organized a workshop for journalists on “Energy Subsidies: How Much is Being Spent, and to What Effect?” on the sidelines of the Durban Climate Change Conference.

The workshop examined how much different forms of energy were being subsidized, whether the elimination of fossil-fuel subsidies would make renewables competitive, and what role the UNFCCC could play in helping phase out harmful fossil fuel subsidies.

Introducing the session, Svend Søyland, Bellona Foundation, noted that energy subsidies distort the market against renewables and that even developed countries like Norway had subsidies to fossil fuels, in the upstream oil and gas sector.

Tim Groser, Minister Responsible for International Climate Change Negotiations, New Zealand, stated that his country, and the Friends of Fossil Fuel Subsidy Reform group of which it is a founding member, are not anti-fossil fuels or anti-subsidies by dogma. He stressed that subsidies to energy consumers cost annually 4-6 times the $100 billion per year needed for the Green Climate Fund to operate, and their removal would fill about half of the gap between national pledges to the UNFCCC and what is needed to limit global temperature rise to 2ºC. He underscored the incoherence of taxing carbon while subsidising it at the same time.

Peter Wooders, IISD’s Global Subsidies Initiative, highlighted that, globally, fossil fuel subsidies tend to be significantly higher than those to renewables, but that per unit of electricity generated the picture was reversed. He added that this analysis did not include non-internalized costs of carbon and other externalities.

Steve Sawyer, Global Wind Energy Council, stressed that the perceptions that fossil fuels are cheap and wind is expensive do not hold up to scrutiny, with wind currently competing with coal in many locations. He underscored that subsidy removal would help further, noting the importance of the non-inclusion of carbon costs in fossil fuels prices.

Srinivas Krishnaswany, Vasudha Foundation, noted that areas with the highest concentration of coal-fired electricity plants were generally those with the lowest access to electricity. He added that the rural poor often pay more per unit of electricity received because of poor service including frequent power outages.

Steve Kretzmann, Oil Change International, outlined way in which the UNFCCC could help with fossil fuel subsidy reform, highlighting issues related to mitigation, finance and reporting.

Jacqueline McGlade, Head of the European Environment Agency, highlighted the transparency in Europe’s reporting and the key role that showing fossil fuels receiving €35 billion per year compared to renewables’ €5.5 billion per year had had on policymakers. She recommended Europe’s work on environmentally harmful subsidies as a good model for other countries to follow.

In the ensuing discussions, participants addressed whether countries are making progress towards reforming fossil fuel subsidies, noting that the subsidy issue has been around for a long time. They noted that the signs are cautiously optimistic, highlighting: the G-20 and APEC commitments of 2009 that have increased interest and momentum; the increase in measuring and transparency; a group of organizations committed to supporting reform is coming together and building up the research and necessary political economy tools. [IRENA Website on the Media Workshops] [IISD RS Sources]