The fossil-fuel subsidies blind spot

Belgium apparently signed the declaration to end “fossil fuel financing”:

Tweet John Murton 2021-11-12

The guy on the left is John Murton (UK Envoy to COP26) who is thanking Zakia Khattabi sitting on the left (Belgian Minister of Climate, Environment, Sustainable Development & Green Deal from Ecolo, the French-speaking Green Party of Belgium) for joining the declaration. The inconvenient reality is that the Belgian Federal Government very recently approved subsidizing the building of new gas-fired power plants in order to replace nuclear power plants.

Most comments below the tweet highlighted the hypocritical nature of that signature, rightfully so. John Murton tried to defuse the situation by responding that he actually meant “international financing” or “overseas financing”, but nobody was particularly impressed by that intervention, also rightfully so. It is still hypocritical to pledge to end international/overseas fossil-fuel financing while at the same time subsidizing the fossil-fuel industry nationally.

Fossil-fuel subsidies are generally indirect advantages like tax breaks, tax exemptions, social tariffs for gas/electricity, freely allocated ETS licenses and so on. Subsidizing the build of new gas-fire power plants is however a direct fossil-fuel subsidy.

The irony is that this is put in place by a Minister of Energy from the (Flemish) Green party. She has a history of increasing to fossil-fuel subsidies, with the approval of her own party. In a previous post, I documented such a case where she added 6 million euro in fossil-fuel subsidies (without calling it that way of course). Now she is adding a lot more (also without calling it a fossil-fuel subsidy).

How much more? In an interview with a former director of the Commission for the Regulation of Electricity and Gas (CREG) a figure of €75,000 per MW during 15 years was put forward. Belgium will need at minimum 2.3 GW of gas power, so this means €172,5 million per year during 15 years. This seems to be confirmed by a similar estimate (up to almost €200 million per year during 15 years) from a politician who has some experiences with this type of subsidies.

The Belgian fossil-fuel subsidies for 2020 amounted to €6,863.51 million, so an extra €172.5 million is an increase of almost 2.5%. This seems not that much, but this is only the beginning. This is just for building the new power plants, not operating it. There are also existing gas-fired power plants (5.3 GW) that will be in need of subsidies when more intermittent power sources are added to the grid. She also gave a reduction of €80 for 1 million social tariff consumers, that is an extra one-time addition of 80 million. All these will add to the fossil-fuel subsidies.

For a member of a political party that opposes fossil-fuels subsidies, these are some pretty remarkable policies.

Further down in the comments, there was this hilarious response by someone who found the headline of a New York Times article of the same day in which John Kerry described fossil-fuel subsidies as the “definition of insanity”, feeding the problem they are there to cure (at COP26):

Tweet Edwin Depaepe 2021-11-12

This is the statement in full from the article:

“That’s a definition of insanity,” Mr. Kerry said, adding that underwriting oil, gas and coal allowed governments “to feed the problem we’re here to cure. It doesn’t make sense.”

I had to chuckle when I first read that tweet in this context. Here we have a Minister from a Green party who, for dogmatic ideological reasons, is willing to subsidize the building of high emission fossil-fuel power plants in order to replace low emission nuclear power plants, meaning that emissions will increase. To put it in the words of John Kerry, it doesn’t make sense.

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