GRFA: Fossil fuel subsidies discourage investment in renewables

By Global Renewable Fuels Alliance | November 12, 2014

The International Energy Agency has released its annual World Energy Outlook, revealing that fossil fuel consumption subsidies reached $550 billion in 2013. According to the IEA these subsidies are failing to help those around the world who lack access to energy and are discouraging investment in energy efficiencies and renewables.

The Global Renewable Fuels Alliance reacted, stating that biofuels offer environmental and economic benefits but require the right policies to be enacted by governments to increase their production and consumption.

“Fossil fuel subsidies are theoretically intended to increase energy access, but according to the IEA these subsidies are failing while discouraging investment in energy efficiencies and renewables. This raises a glaring question: who’s the $550 billion benefiting?” asked Bliss Baker, spokesperson for the GRFA.

Despite falling oil prices, fossil fuel consumption subsidies rose by $6 billion to $550 billion in 2013, up from $544 billion in 2012. By comparison, all global renewable energy sources received less than a quarter of that amount in subsidies.

“It seems counterproductive to subsidize the most profitable industry on Earth that contributes the majority of global greenhouse gas emissions, especially when biofuels are growing and are the only commercial alternative to transport fossil fuels,” stated Baker.

According to this year’s World Energy Outlook, by 2040, biofuels use will more than triple, rising from 1.3 million barrels of oil equivalent per day (mboe/d) in 2012 to 4.6 mboe/d in 2040. According to the IEA this will represent 8 percent of road-transport fuel demand.

In 2011, the IEA released their Technology Roadmap – Biofuels for Transport, which stated that biofuels could make up 27 percent of the world’s transport fuels by 2050 and eliminate 2.1 gigatonnes of CO2 emissions. Later in 2012, the IEA called for biofuels production to double so their CO2 reduction goal could be met by 2020. It is important that countries adopt the right policies to achieve these potential CO2 reductions.

“The potential for biofuels use tripling by 2040 is positive news. However, it does not represent the full potential of a fully developed global biofuels industry. With the right policies, biofuels could provide over a quarter of the world’s transport fuels by 2050 and eliminate 2.1 gigatonnes of CO2 emissions,” stated Baker.

In addition, enacting the right biofuels friendly policies could unlock tremendous potential, particularly in Africa.

Heiner Thofern, head of the UN’s Food and Agriculture Organization’s (UNFAO) Bioenergy and Food Security Project, has previously said that if “done properly and when appropriate, bio-energy development offers a chance to drive investment and jobs into areas that are literally starving for them.” A 2011 study by the UNFAO showed that biofuel production can boost food and energy security and reduce poverty in developing countries at the same time.

“Another year has passed and fossil fuel subsidies continue to grow despite fuel prices falling. The GRFA is calling on all nations and organizations to make it a priority to eliminate these subsidies and focus our efforts on building up the capacity of commercial alternatives, like biofuels,” concluded Baker.