Coal Subsidies Continue Around the World

Tuesday, June 25th, 2019

Despite promising a decade ago to phase out fossil fuel subsidies, the world’s leading economies have more than doubled subsidies to coal-fired power plants over three years, putting climate goals at risk, energy researchers say.

Between 2014 and 2017, G20 governments more than halved direct support for coal mining, from $US22 billion ($A32 billion) to about $US10 billion ($A14 billion) on average each year, according to a report by the London-based Overseas Development Institute (ODI) think tank.

But over the same period they boosted backing for coal-fired power plants – particularly supporting construction of the plants in other, often poorer nations – from $US17 billion ($A24 billion) to $US47 billion ($A68 billion) a year.

China and Japan – hosting a G20 summit this week in Osaka – were the biggest providers of public finance for coal power, followed by South Korea and India.

While spending from national budgets on coal fell, as did tax breaks, other forms of support – from development finance institutions, export-credit agencies and state-owned enterprises – soared, the report said.

“You can see they’re pretty much exporting the dirty energy systems to countries in much earlier stages of their development,” Ipek Gencsu, a researcher at ODI and a lead author of the report, said.

Those include nations such as Bangladesh, Indonesia, Pakistan and Vietnam, she said, where foreign backing for coal power is slowing adoption of cleaner energy systems and locking in dirty energy and air pollution.

To meet an internationally agreed goal of holding rising global temperatures to well below 2C above pre-industrial times, coal power will need to be phased out between 2030 and 2050, according to the Powering Past Coal Alliance.

That alliance, formed in 2017 and led by the British and Canadian governments, includes 30 countries as well as businesses and other organisations committed to switching to clean energy as rapidly as possible.

Coal currently provides about 40 per cent of the world’s electricity.

Governments are also helping support coal companies no longer financially viable, often to ensure a stable baseline of power to complement fluctuating renewable energies such as wind and solar, Gencsu said.

Coal subsidies also continue in many places because of powerful coal lobbies – or because politicians prefer to delay politically painful decisions.

Globally, direct fossil fuel subsidies were $US427 billion ($A614 billion) last year, according to the International Energy Agency.

Indirect fossil fuel subsidies – including costs to health systems from air pollution and fossil fuel spill clean-ups – were estimated at $US5.2 trillion ($A7.5 trillion) a year in 2017, according to the International Monetary Fund.

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