Fossil fuel subsidies are “public enemy number one” – IEA Chief

» By | Published 04 Feb 2013
Fatih Birol at the EWEA 2013 Opening Session

Fatih Birol at the EWEA 2013 Opening Session

Fossil fuel subsidies – which amounted to half a trillion US Dollars worldwide in 2011 – are effectively an incentive to pollute and as such are “public enemy number one to sustainable energy development,” Fatih Birol, Chief Economist at the International Energy Agency said at EWEA’s 2013 Annual Event in Vienna on Monday.

Christian Kjaer, EWEA CEO, added that European citizens are transferring a rapidly rising share of their wealth to a handful of fossil fuel exporting countries. “In 2009 the EU spent €274 billion on fossil fuels imports – 2.1% of its GDP, a level which increased by €200 billion or 70% over just three years to 2012,” he said. “Today, EU citizens are spending half a billion Euros more each day on fossil fuel imports than they were three years ago,” he added.

“Fossil fuel subsidies do not make sense,” Birol said. Subsidies keep fossil fuels artificially cheap and without a phasing out of fossil fuel subsidies, we will not reach our climate targets. “I hope governments pay attention this,” Birol stated.

“One of the main arguments to keep fossil fuel subsidies is that they protect the poor, but studies show that 80% of fossil fuel subsidies go to middle and high income households,” Birol said.

He also pointed out that oil prices were, in 2012, at $112 per barrel – the highest level in history, and today [February 2013] prices are at $116 per barrel. As oil prices go up, so too do gas prices and today gas prices in the EU are five times higher than those in the US: “The rising oil and gas import bill is a major challenge for the European economy,” he said.

Stable government policies needed

One of the biggest challenges wind energy faces today is the lack of predictability of government policies, and not the lack of predictability of wind power, Birol said at the opening session of the conference. “If governments would be predictable we would win this game,” he added.

Anni Podimata, Vice-President of the European Parliament said retroactive policy changes “clearly undermine investment in renewable energy projects.”

Austrian Environment Minister Nikolaus Berlakovich called on governments to create stable policy frameworks “in order to send clear signals to investors and citizens.” Austria has a target of 34% renewable energy by 2020 and a longer term target of 100% self-sufficiency in energy by 2050.

“Renewables are also a strong economic motor creating green jobs. In Austria there will be 100,000 new green jobs up to 2020,” Berlakovich stated.

Pat Rabbitte, Irish Minister for Energy, said the EU needs to guide growth in renewables through a new renewable energy target beyond 2020. Podimata said a new target of 45% renewable energy by 2030 is “absolutely realistic.”

“Renewables can lead the way to drive Europe out of the crisis to a strong sustainable growth path,” Podimata added.

EWEA’s 2013 Annual Event continues in Vienna until Thursday. For more information on how to attend, click here. If you are already in Vienna, today continues with a focus on finance and tonight sees the conference opening reception in the Vienna City Hall.

For more reporting live from the conference return to this blog.

Categories: EWEA