Obama to propose eliminating fossil fuel subsidies?

The rumor (at the moment, it’s September 17th) is that next week at the G20 meeting, President Obama is going to propose an international agreement to end fossil-fuel subsidies. This would be brilliant, if it was done properly, and would go a long way towards rectifying the wealthy world’s typical unwillingness to consider “alternative” approaches to climate finance.

And there is, indeed, hope that it will be done properly. The New York Times reports that Michael Froman, the White House’s deputy national security adviser for international economic affairs, said in a Sept. 3 letter that:

The move away from subsidies should be managed to protect those most vulnerable to price increases… The G-20 should commit to take the lead in eliminating non-needs based fossil fuel and electricity subsidies and to provide technical assistance to non-G-20 countries taking steps to reduce fossil fuel and electricity subsidies.

Still, there are good reasons to fear that fossil subsides, if they are in fact cut, will be cut in a way that focuses on cutting consumption subsides (which often support access to energy services for the poor) rather than production subsidies (which generally support the profits of the fossil cartel). For a nice, quick, analysis of the issues here, see this Grist posting by Steve Kretzmann of Oil Change International.

Here’s how bad it could get:

Great, lets end fossil fuel subsidies. Absolutely, we must find money for international climate finance. But if Obama and others focus first on consumption subsidies the motives look less like fiscal responsibility and a stable climate, and more like a finger pointing exercise or negotiating tactic designed to show that the developing world has plenty of funds available to adapt to climate change and invest in clean energy, if only they would stop making energy affordable for their populations.

It shifts blame for the looming potential failure in Copenhagen to China, Russia, India, and others, and away from the US and Europe. If thats the point, it might work well.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.