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With Putin’s War, The Production Of Fossil Fuels Has Increased Significantly in Major Economies
(CTN News) – Coal, oil, Fossil Fuels and natural gas production and consumption were sharply increased in major economies,
With many countries struggling to balance longstanding pledges to phase out inefficient fossil fuel subsidies with efforts to protect households from rising energy prices,
According to an analysis released today by the Organization for Economic Co-operation and Development.
The OECD and IEA have reported that government support for fossil fuels has almost doubled to $697.2 billion in 2021 from $362.4 billion in 2020 as energy prices rise.
Furthermore, consumption subsidies are expected to increase even further in 2022 due to higher fuel prices and energy consumption.
According to OECD Secretary-General Mathias Cormann, “Russia’s war of aggression against Ukraine has led to sharp rises in energy prices.
While fossil fuel subsidies encourage wasteful consumption, they don’t necessarily reach low-income households.
“We need to adopt measures that protect consumers from the extreme impacts of shifting market and geopolitical forces, so we stay on track to carbon neutrality and energy security.”
In times of high and volatile fuel prices, the difficulty that governments face in removing fossil fuel subsidies is highlighted.
Fatih Birol, IEA Executive Director, said, “Investing in clean energy technologies and infrastructure is the only lasting solution to today’s global energy crisis.”
Government support for fossil fuels is estimated using complementary databases from the OECD and IEA.
A total of 51 major economies are included in the current OECD-IEA estimates, including the OECD, G20, and 33 other major energy producing and consuming economies.
In 2021, fossil fuel subsidies grew to $190bn from $147bn in 2020, according to OECD analysis of budgetary transfers and tax breaks.
With $64 billion in support for producers in 2021, the OECD has seen levels not seen before, up almost 50% year-over-year, and 17% above 2019.
Consumer subsidies reached $115 billion in late 2021, up from $93 billion in 2020, to partially offset producer losses from domestic price controls.
The IEA estimates fossil fuel subsidies by comparing international prices to domestic prices.
Direct price regulation, pricing formulas, border controls or taxes, and domestic purchase or supply mandates can all artificially reduce prices.
Consumer support increased to $531bn in 2021, more than triple its level in 2020, according to the IEA.
Public funding should be redirected toward developing low-carbon alternatives alongside improvements in energy security and energy efficiency, according to the OECD and IEA.
Low-income subsidies often benefit wealthier households that consume more fuel and energy, and should be replaced with more targeted subsidies.
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