European fossil fuel “subsidies”: scraping the bottom of the barrel

A rather confusing news article from the Guardian written: European countries spend billions a year on fossil fuel subsidies, survey shows by Fiona Harvey.

Eleven European countries were surveyed and it was found that those subsidies totalled to a huge number (my emphasis):

Governments of 11 European nations are providing subsidies totalling more than £80bn a year to fossil fuel industries, green campaigners have claimed.

Who those “green campaigners” are is not really clear from the article. There is no link to their survey either. All the links in the article go to other Guardian articles. It is not really clear how these campaigners surveyed those countries or what their methodology was. What is known are the surveyed countries: the Czech Republic, France, Germany, Greece, Hungary, Italy, the Netherlands, Poland, Spain, Sweden and the UK.

Let’s start with the break-down of the fossil-fuels subsidies of those countries as reported by the Guardian journalist.

The first category is transport (my emphasis):

Transport fuels account for the lion’s share of the support to fossil fuels. Many of the 11 countries surveyed encourage drivers to use diesel as it produces less carbon per mile than petrol, despite the fuel’s effects on air pollution which is particularly harmful to children. For many years, governments had incentives to prioritise the use of diesel, as it helped them meet internationally-set carbon reduction targets.

Now I am a bit confused. I understand that those countries encouraged drivers to use diesel because it has less CO2 emissions than petrol. Not sure why this is concidered a subsidy however. The next sentence changes subject (my emphasis):

A substantial amount of the claimed subsidies are for fuels such as gas, which is viewed by many as a transition away from more carbon-intensive fuels such as coal.

This doesn’t seem to be in the category transport anymore. A fuel that is used to move away from for example coal, then they probably mean gas for electricity production and maybe also fuel for heating homes?

Next sentence, again change of subject:

Taxpayer support for electric vehicles, renewable electricity and other low-carbon efforts were not counted in the study by the Overseas Development Institute (ODI).

That is like kicking in an open door. Of course, the subject is fossil fuel subsidies, so support for electric vehicles, renewable electricity or other low-carbon effort are not included. That is the very definition of “fossil-fuel subsidies”. Not sure why this is even in here.

By that time, I assumed that this Overseas Development Institute was the source of this survey. I located their website and did find reports on fossil-fuel subsidies, also European, but no survey on those 11 countries.

Then the subject changes back to transport and at last some explanation why the use of that diesel is considered a subsidy:

In the UK, diesel fuel is taxed by volume at the same rate as petrol. This taxation can favour the dirtier fuel because diesel cars travel further than petrol vehicles on the same volume of fuel.

If I understand that right, diesel and petrol are both taxed by volume, but since cars run more miles on the same volume of diesel than of petrol, that difference amounts to a fossil-fuel subsidy?!?!

At this point my assumption was that those “green campaigners” who conducted that “survey” tried very, very hard to lump as many things together that sounded like fossil fuel expenses to come to a high number.

Then the bombshell (my emphasis):

Half of the support provided to fossil fuels was targeted at low-income households, the report acknowledged. Such measures by governments are intended to protect people on low incomes from fuel poverty. Nearly €5bn of the overall support was provided in this way by the UK government alone.

That doesn’t make much sense. Firstly, this “subsidy” is on the USE of energy, not its production, and not necessarily dependent on fossil fuels. It will even increase in the case of an increasing share of intermittent energy sources.

Secondly, that leaves me with the question how it is mathematically possible that HALF (= 50%) of those fossil-fuel subsidies are targeted at low-income households, yet the LION’S SHARE (= the largest part, meaning > 50%) are transport subsidies, still leaving some room for a SUBSTANTIAL AMOUNT (= of ample or considerable amount) of gas subsidies. I understand that there could be some overlap in the two first categories, but not between the first and the third (I don’t think that low-income households do transports and get their diesel cheaper).

By that time, I gave up. Just scanned through the rest of the article, seeing that some other numbers were thrown around of gas and coal. It is not clear whether they come from that “survey” or from some other green campaigner who got to say something in that article. Not sure either whether they are seperate categories or whether they belong to one of the above categories (probably they belong to the second category).

I am not really impressed by those “subsidies”. First, there is that transport in which an equal tax on a better performing fuel is equated with a subsidy. Second, there are the not explained subsidies on gas. Later in the article, “money spent on gas infrastructure” is mentioned (but how is money spent on gas infrastructure a subsidy?). Third, the lower prices for the low-income households, which will not disappear with a lower share of fossil fuels, on the contrary.

It seems like they really had to scrape the bottom of the barrel.

6 thoughts on “European fossil fuel “subsidies”: scraping the bottom of the barrel

  1. manicbeancounter

    I believe – which can be verified by a proper audit – that the €5bn of “fossil fuel” support for families on low incomes to keep them out of fuel poverty is a gross exaggeration. This is for gas and electricity, of which around 80-90% of the kilowatt hours is from fossil fuels. The other is from nuclear, burning wood (biomass), wind, hydro and solar. That would indicate the total support to be around €6n. But the main reasons that costs have risen so much in recent years is mostly down to renewables subsidies, limitations of competition and efforts to stop the development of shale gas, of which there are vast reserves. Without the push “lead the world on climate change” energy bills would be at least 30% lower and maybe even half what they are today. The true subsidy here is about zero.
    On diesel having a subsidy because a diesel engine is inherently more efficient than a petrol (gasoline) one, the logic can also be applied elsewhere. New, more efficient, cars receive a subsidy from old cars. A Toyota Aygo receives a subsidy from large and powerful cars.

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  2. chrism56

    One of the things to be aware is that often, the green lobby uses tax issues as depreciation and decommissioning costs to say these are fossil fuel “subsidies”. But they don’t apply the same to the renewable costings. Another trick used is to use a price for externalities, like deaths from PM10 or the lack of a carbon levy.
    Here is an example:
    http://www.caneurope.org/publications/blogs/1278-fossil-fuel-subsidies

    Dishonesty does even half cover their use of words.

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    1. trustyetverify Post author

      Nice article! A recommended read.

      Activists can get away with it because they are calling tax breaks a subsidy, while people will not consider these a “subsidy”. Since most readers don’t go and look at the source of a claim, they keep the wrong frame work and are possibly disgusted by those “fossil fuel subsidies”. The author broke out of this by taking a deeper look at those “subsidies” and the conclusion from his own research made it a strong article.

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