If the current negotiations for a climate-change pact have taught the world anything, it is the need for more hard work to break old energy habits. One habit under a harsh spotlight at the Paris talks is the common practice of governments to subsidize coal and oil use. This financial support only encourages fuel waste. And it sends the wrong signal about the future cost of global warming. Ending fossil-fuel subsidies would cut global carbon emissions by 20 percent, according to the International Monetary Fund.
“Fossil fuel subsidy reform is the missing piece of the climate change puzzle,” says New Zealand Prime Minister John Key, who helped form a coalition of more than 30 nations before the talks to push for subsidy reform.
Since 2009, fuel subsidies have fallen by a fifth, according to the International Energy Agency (IEA). At the same time, even richer countries that are well on the path to clean energy find the habit hard to break.
In poorer countries, the subsidies allow the price of gasoline and diesel to remain affordable for low-wage consumers. In wealthier countries, they support the petroleum or coal industries, and the jobs they bring. In recent years, a few poorer nations such as India, Indonesia, and Egypt have reduced their subsidies after being persuaded there are better ways to help the poor but also to help reduce air pollution. This is a point of progress in the global effort against climate change.
Among eight of the most industrialized nations – Australia, Canada, France, Germany, Italy, Japan, the United Kingdom and the United States – government support for fossil fuel production still amounts to a combined $80 billion a year, according to a study by the Oil Change International and the Overseas Development Institute. And the Paris-based Organization for Economic Cooperation and Development recently tallied up 800 ways that wealthier nations support fossil fuel producers.
A good example of the problem lies in Germany, one of the most successful countries in advancing renewable energy. It finds solar and wind power to be too erratic and intermittent to provide a steady supply of electricity. To prevent blackouts, the government plans to pay utility companies to keep big power plants on the ready during peak demand. France, Britain, and a few other European countries are moving toward similar “capacity” payments to keep oil, coal, or gas plants in reserve. Yet officials also admit these payments are only temporary until a range of solutions to address climate change are in place.
The Paris talks are not expected to reach a consensus about placing a high price on carbon use. Yet a global consensus is clearly emerging to end fuel subsidies. Good habits are replacing bad ones.