Europe still providing almost £100bn in fossil fuel subsidies

29th September 2017


European governments are handing out more than €112bn (£99bn) each year to prop up fossil fuel projects, despite pledging to phase out harmful subsidies by 2020.

That is according to a report by the Overseas Development Institute (ODI), which shows the transport sector was the main beneficiary from 2014-16, receiving 44% of the total support.

This included tax breaks to reduce the price of diesel, discouraging the switch to low-carbon transport at a time when the health costs from air pollution have become more apparent.

"This study shows how governments in Europe continue to subsidise and finance a reliance on oil, gas and coal, fuelling dangerous climate change and air pollution with tax-payers' money,” ODI head of climate and energy, Shelagh Whitley, said.

The research involved gathering detailed information on the support provided to fossil fuels from the Czech Republic, France, Germany, Greece, Hungary, Italy, Netherlands, Poland, Spain, Sweden, UK and the EU from 2014-16.

It was found that the EU provided an annual average of €4bn in fossil fuel subsidies through its budget, development and investment banks and funds, contrary to the targets set out in the Paris Climate Agreement.

“The €4bn spent by the EU on fossil fuels, most of which goes to gas infrastructure, locks Europe into fossil fuel dependency for decades to come,” CAN Europe director, Wendel Trio, said.

“This violates the Paris Agreement’s requirement to make finances work for the climate. Instead, the scarce resources of the EU budget and the EU’s development and investment banks should finance the clean and sustainable energy transition.”

It was also found that subsidies continue to be provided for fossil fuel exploration, with the UK and France spending €253m each year in public finance on finding new resources.

The report recommends European governments and the EU increase transparency through publicly disclosed annual reporting, and target and remaining subsidies to supporting workers and communities to move away from fossil fuels.

It also says they should lead the G7 and G20 by meeting their commitment to phase out fossil fuel subsidies by 2020, and ensure the energy transition does not involve carbon-intensive production and consumption.

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