The chief economist of the International Energy Agency (IEA)
has urged the world to slash hundreds of billions of dollars of fossil fuel
subsidies or face the prospect of a catastrophic 3.5 degrees Centigrade rise in
global temperatures.
“Today $409 billion equivalent of fossil fuels subsidies are
in place which encourage developing countries - where the bulk of the energy
demand and CO2 emissions come from – [towards a] wasteful use of energy,” Fatih
Birol told EurActiv in an exclusive interview.
The sum represents a $110 billion increase on the 2009
level.
According to Birol, cutting such subsidies in major non-OECD
countries is “the one single policy item” which could help reorient the world
towards a trajectory of 2 degrees global warming.
It would also reduce CO2 emissions and help renewable
energies such as solar and wind power to get a bigger market share, according
to the IEA's World Energy Outlook 2011 report which will be released on 9
November.
Analysis in the report “indicates that the door for a 2
degrees trajectory may be closing if we do not act urgently and boldly,” Birol
said.
“In our central scenario, seven countries introduce some
form of carbon pricing which brings us to a 3.5 degree trajectory,” he added.
“But if we want to keep the temperature increase to 2
degrees, many more countries need to do so. The most important condition is
that there’s coordinated international action in place.”
Irreversible impact
A 3.5 degree temperature rise would cause “irreversible
impacts” according
to the Inter-governmental Panel on Climate Change(IPCC), including
the mass extinction of an estimated 40%-70% of the world’s species.
To avoid this nightmare scenario, Birol said that the
upcoming Climate Change conference in Durban, South Africa, could be “very
important and in fact one of the last opportunities if we are serious about
limiting temperature increase to 2 degrees Celsius.”
“However, looking at the current international policy debate
on climate change I would say that the wind is not blowing in the right
direction,” he warned.
Outside of the talks, an international consensus already
exists on the need to try to cut CO2 emissions by providing start-up finance to
renewable energy firms through loans, tariffs, guarantees, and incentives.
Lion's share of spending not on renewable
Butresearch by Bloomberg New Energy Finance in 2010found
that governments around the world were spending twelve times more on fossil
fuel subsidies than on those for renewable energy.
“Since fossil fuel prices are heavily subsidised, renewable
energies have to compete with a low price fossil fuel energy production, which
is definitely unfair,” Birol said.
By 2020, the IEA expects global fossil fuel consumption
subsidies to reach$660 billion, or 0.7% of global GDP.
If the aid was phased out, growth in energy demand would be
cut by 4.1%, oil demand would fall by 3.7 million barrels a day and CO2
emissions would be cut by 1.7 Gigatonnes.
Some developing world economies are unenthusiastic about
removing aid to money-spinning fossil fuel industries that are trying to
compete with their already well-established (and previously subsidised) Western
counterparts.
Ending subsidies
Christopher Burghardt, the Vice President of a leading US
solar energy firm, First Solar, said that the issue for him was “less about levelling
[fossil fuel] subsidies than ending them”.
“Such a step would be a critical one on the way to an
electricity market in which renewable and traditional generation can compete on
a level playing field,” he added
In an interview with EurActiv earlier this year, Achim
Steiner, the executive director of the United Nations Environment Programmealso
arguedthat state aid to fossil fuel industries was incentivising
greenhouse gas emissions.
“If you remove those subsidies, other power-producing
technologies for electricity and mobility will quickly make their way into the
market,” he said.