IEA says increasing subsidies represent significant liability

The International Energy Agency (IEA) said that global subsidies for fossil fuel consumption will most likely reach US$660 billion in 2020 unless policies are made to eliminate this form of state aid. IEA, an energy watchdog to 28 industrialized nations said, “Governments and taxpayers spent about half a trillion dollars last year supporting the production and consumption of fossil fuels.” In an extract of its annual World Energy Outlook, the energy watchdog also said, “In a period of persistently high energy prices, subsidies represent a significant economic liability”. The IEA said that oil products received the largest subsidies at US$193 billion in 2010, while US$91 billion went to natural gas. The IEA said that Iran and Saudi Arabia had the biggest subsidies. It also estimated that the total subsidies paid worldwide reached US$400 billion in 2010 compared to US$312 billion in 2009. In 2009, leaders of the Group of 20 (G20) major economies made a commitment to phase out inefficient fossil fuel subsidies over the medium-term. These subsidies were considered to be an encouragement towards wasteful consumption. If fossil fuel consumption subsidies are eliminated by 2020, global energy demand would be slashed by 4%. The removal of such subsidies would also considerably reduce carbon emission growth. (October 4, 2011)