global energy subsidies

Earth Track Blog Post

There has never been a systematic review of global subsidies to energy that capture all fuels, all countries, and both the consumer and producer sides of the market.  However, a recent article on cybercrime (quite an interesting read) by Michael Riley at Bloomberg allows some interesting comparisons, albeit using partial data, on the massive scale of energy subsidies relative to some other global "industries."

$43,000,000  - Total value of all US bank robberies in 2010 according to the US Federal Bureau of Investigation

$85,000,000,000 - Global market for cocaine per year, according to United Nations data

$114,000,000,000 - Value of data stolen each year, according to security firm Symantec

$409,000,000,000 - 2010 subsidies to fossil fuel consumers as estimated by the International Energy Agency

Okay; the comparison may be somewhat unfair.  The global cocaine market, after all, spurs all sorts of violence and injustice in its wake, while at least some fossil fuel subsidies go to the poor and help keep them afloat.  Point taken -- but only partially. 

The massive scale of energy subsidies in relation to these other activities ought to give us pause.  In terms of misdirection of societal resources, the problem is immense -- all the more so once one remembers how partial the IEA subsidy figure is.  It captures only fossil fuels, not all energy; and focuses only on subsidies to consumers, not to the producer side as well.  And, while some of the fossil fuel subsidies do help the poor, the subsidy analysis in IEA's 2011 World Energy Outlook (the source of the $409 billion subsidy figure), also shows that the vast majority of subsidies flow to wealthier parts of society, not the poorest.  As a result, the energy subsidies have the effect of diverting an enormous pool of fiscal resources away from better policies to create opportunity and alleviate poverty for the poorest segments of society.