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World should eradicate fossil fuel subsidies: IEA

LONDON - Abolishing fossil fuel subsidies would boost the world’s economy, environment and energy security, the International Energy Agency said on Tuesday, referring to a pledge made by G20 countries.

World leaders committed in Pittsburgh in 2009 to phase out, over the medium-term, fossil fuel subsidies which encouraged wasteful consumption. A G20 meeting in Seoul this week may update progress on the goal.

“Eradicating subsidies to fossil fuels would enhance energy security, reduce emissions of greenhouse gases and air pollution, and bring economic benefits,” said the IEA, the energy watchdog to 28 industrialised countries, in its annual set-piece World Energy Outlook.

The report estimated such subsidies at $312 billion in 2009, mostly in developing countries, compared with $57 billion in subsidies for renewable energy.

Fossil fuel subsidies were on course to reach $600 billion by 2015, and renewables subsidies more than $100 billion, said Fatih Birol, IEA chief economist and lead author of the report.

Eliminating fossil fuel consumption subsidies by 2020 would cut global energy demand by five per cent, compared with no action, and reduce carbon emissions by nearly six per cent by then, said the IEA report.

Economists say that governments should penalise fossil fuels, to take account of the damage that greenhouse gas emissions will cause the climate, and blamed subsidies for encouraging waste and undermining greener alternatives. Achim Steiner, head of the UN Environment Programme, said on Tuesday that a G20 push to phase out subsidies for the fossil fuel industry would be a “good start” to slow climate change.

Cash-strapped western countries are struggling to raise cash for renewable energy, which is often more expensive than conventional alternatives.