Fired up about fossil fuel subsidies

Fossil fuel subsidies have to end. That was the call by Australian Prime Minister Julia Gillard in the lead up to this year’s Budget, and one echoed by the World Bank Chief Jim Yong Kim and the OECD. In a move that can have a significant impact on mitigating climate change by reducing demand for and usage of carbon intensive fuel, cutting off fossil fuel subsidies also puts money in programs that will benefit a larger segment of the population. Read more



31 January 2013

Now is the time to cut fossil fuel handouts

The Australian Conservation Foundation has called on the Federal Government to make good on its commitment to remove wasteful tax breaks by cutting fossil fuel handouts that encourage carbon pollution.

Yesterday Prime Minister Julia Gillard told the National Press Club the government would announce “substantial new structural savings” in the lead up to this year’s Budget.

Today the annual tax expenditures statements were released, showing an unprecedented increase in tax breaks for mining companies.

According to Treasury data, tax breaks for exploration and prospecting have increased from $320 million last year to $550 million this year, while accelerated depreciation for fossil fuel intensive assets is now costing the taxpayer a whopping $1.3 billion per year.

“For a government that is looking for structural savings and wanting to remove wasteful subsidies, cutting the senseless tax breaks that promote pollution should be a no-brainer,” said ACF’s Director of Strategic Ideas, Charles Berger.

“Over the next four years, the Commonwealth is set to waste $22 billion – or $1,000 for every Australian – on the four biggest handouts to fossil fuel industries. It would be irresponsible and unethical to cut social programs while leaving these subsidies.

“Through the fuel tax credit handout, for example, Australia is forgoing spending on education and social programs so mining barons can pay little or no tax for their fuel.

“While the rest of us pay 38c a litre in taxes at the bowser, these companies are mining the public purse and in the process they are making climate change worse.

“Just as household ratepayers pay for their rubbish to be collected each week, it’s time Australian companies started paying their fair share.

“This year’s Budget provides the golden opportunity for the government to make structural savings and honour its G20 commitment to phase out fossil fuel subsidies.”

The Australian Conservation Foundation’s budget submission identifies savings the government can make by repealing wasteful, pollution-promoting subsidies.

More about fossil fuel subsidies at



30 Jan, 2013, 03.23PM IST, PTI

Fuel subsidies benefit people having cars and motorcycles: OECD

Last week World Bank Chief had said that countries should do away with subsidies for fossil fuels to help mitigate the impact of climate change.

NEW DELHI: Fuel subsidies are not really helping achieve the desired purpose and are mostly benefiting people having cars and motorcycles, a top official of Paris-based think tank OECD said today.

“Fossil fuel subsidies affect people who have cars, people who have motorcycles… So, in equity terms, fuel subsidies are not really doing what they are purported to be doing,” OECD Deputy Secretary General Richard Boucher said.

He was talking about fuel subsidies in the context of inclusive economic growth.

India and many other countries provide subsidies on fossil fuels like diesel and kerosene.

The Organisation for Economic Cooperation and Development (OECD) is a grouping of mostly rich nations.

Boucher was participating in a round table on ‘New Approaches to Economic Challenges’ organised by public policy think tank Observer Research Foundation.

Last week World Bank Chief Jim Yong Kim had said that countries should do away with subsidies for fossil fuels to help mitigate the impact of climate change.

“We should be removing fossil fuel subsidies in every country in the world,” the World Bank President had said.

He said for instance Tunisia was finding it difficult to limit fossil fuel subsidies.

“The other issue is that we have fossil fuel subsidies. I was just in Tunisia and they are struggling to find a way to limit fossil fuel subsidies. (They said) that fossil fuel subsidies help richer people who drive cars.

“(fossil fuel subsidies) are fundamentally not progressive. We want to protect the poor and the fossil fuel subsidies don’t do that… But it is politically very difficult,” Kim had said.

Meanwhile, Boucher said that when it comes to inequality, governments need to look at ways that go beyond public spending.

In a response to a query on the government’s direct cash transfer initiative, he said it is the “right step”.

“Cash transfer is the right idea… in going from generalised subsidies to targeted ones,” he added.

However, he emphasised that such a system should be carefully designed to ensure that money reaches the right hands and is spend on the family.


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