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Estimates of fossil fuel subsidies range from $US151 billion to $US235 billion per year globally (in around 2001-2002).<ref name="Riedy">This information comes from ''Subsidies that Encourage Fossil Fuel Use in Australia'' {{PDFlink|http://www.isf.uts.edu.au/publications/CR_2003_paper.pdf}}, Working Paper CR2003/01, January 2003, by Christopher Riedy, PhD Candidate, [Institute for Sustainable Futures] at the {{WP|University of Technology, Sydney}}.</ref> - this is an incentive to use polluting, greenhouse-gas-producing fossil fuels instead of clean [[renewable energy]]. As it has been argued: | |||
===Suggested project | :<tt>The real problem is that electricity produced in Australia from fossil fuel such as coal is subsidised to the tune of an astounding $8.9 billion, so it is far too cheap. If these subsidies were removed, and a carbon tax applied to polluting energy producers, then renewable energy would successfully compete and the free market would steer us in the right direction of reducing greenhouse gas emissions.</tt><ref>These words are by Appropedian [[User:Peter Campbell|Peter Campbell]] in his blog post, [http://petercampbell.blogspot.com/2007/02/remove-89-billion-fossil-fuel-subsidies.html Remove $8.9 billion fossil fuel subsidies to combat climate change], February 20, 2007.</ref> | ||
==Fuel subsidies and social needs== | |||
Fuel subsidies have been practiced particularly in the developing world,<ref name="Riedy"/> where fuel is considered a basic need, and particularly in oil-producing countries.{{fact}} Where a fixed price was used, through a government monopoly, this meant that as oil prices rose, people paid the same amount with no increased incentive to economize, while the subsidy increased dramatically. This may mean a loss of revenue for the government for oil-exporting nations, or a heavy expenditure if importing. | |||
Indonesia is one example of this. When the government finally increased the price in 2006, this caused much opposition in the populace; the rise in prices it was offset by a grant made to poorer families of a flat amount of money, but the negative effect was still significant.{{fact}} Indonesia's dilemma was made more difficult by the fact that its economy was still struggling after the 1998 monetary crisis, and the fact that it had become a net importer of oil.{{fact}} | |||
==Suggested project== | |||
*Research these incentives in other countries (perhaps starting with references given in Riedy's working paper<ref name="Riedy"/>. Consider other sides of the argument.{{sp}} | *Research these incentives in other countries (perhaps starting with references given in Riedy's working paper<ref name="Riedy"/>. Consider other sides of the argument.{{sp}} | ||
*Investigate the extent of similar market distortions that are bad both from a neo-classical economics perspective, and from green and left-wing perspectives.{{sp}} | *Investigate the extent of similar market distortions that are bad both from a neo-classical economics perspective, and from green and left-wing perspectives.{{sp}} | ||
Revision as of 06:38, 14 March 2007
Estimates of fossil fuel subsidies range from $US151 billion to $US235 billion per year globally (in around 2001-2002).[1] - this is an incentive to use polluting, greenhouse-gas-producing fossil fuels instead of clean renewable energy. As it has been argued:
- The real problem is that electricity produced in Australia from fossil fuel such as coal is subsidised to the tune of an astounding $8.9 billion, so it is far too cheap. If these subsidies were removed, and a carbon tax applied to polluting energy producers, then renewable energy would successfully compete and the free market would steer us in the right direction of reducing greenhouse gas emissions.[2]
Fuel subsidies and social needs
Fuel subsidies have been practiced particularly in the developing world,[1] where fuel is considered a basic need, and particularly in oil-producing countries.[verification needed] Where a fixed price was used, through a government monopoly, this meant that as oil prices rose, people paid the same amount with no increased incentive to economize, while the subsidy increased dramatically. This may mean a loss of revenue for the government for oil-exporting nations, or a heavy expenditure if importing.
Indonesia is one example of this. When the government finally increased the price in 2006, this caused much opposition in the populace; the rise in prices it was offset by a grant made to poorer families of a flat amount of money, but the negative effect was still significant.[verification needed] Indonesia's dilemma was made more difficult by the fact that its economy was still struggling after the 1998 monetary crisis, and the fact that it had become a net importer of oil.[verification needed]
Suggested project
- Research these incentives in other countries (perhaps starting with references given in Riedy's working paper[1]. Consider other sides of the argument.[expansion needed]
- Investigate the extent of similar market distortions that are bad both from a neo-classical economics perspective, and from green and left-wing perspectives.[expansion needed]
Interwiki links
- Wikipedia:Perverse incentive - an incentive that has the opposite effect of that intended. (Note that "Incentives to pollute" described on this page may not fall into this category, as the intention was to create an unrelated incentive or subsidy, e.g. to support economic activity.
Notes
- ↑ 1.0 1.1 1.2 This information comes from Subsidies that Encourage Fossil Fuel Use in Australia Template:PDFlink, Working Paper CR2003/01, January 2003, by Christopher Riedy, PhD Candidate, [Institute for Sustainable Futures] at the W.
- ↑ These words are by Appropedian Peter Campbell in his blog post, Remove $8.9 billion fossil fuel subsidies to combat climate change, February 20, 2007.