Thread by @powellds

doesn’t make much sense to talk about redirecting fossil fuel *subsidies* to clean energy, cos vast majority of our considerable subsidy for fossil fuels doesn’t really work like that. But we can & should retilt them to have the opposite effect to what they do now. Read on (1/n)

Firstly there is no official definition of a fossil fuel subsidy that everyone agrees on. Semantic slipperiness applies and it can all become very tiresome as countries like the UK tried to find their way out of subsidy. Read my blog about it neweconomics.org/2016/07/the-lo…

For me the fundamental point is: is an economic tool being used, on purpose, to make the economics of fossil feels better than it would otherwise be? Answer: yes, all over the shop.

The UK economically supports fossil fuels at least 7 ways
1) exploration subsidies. Ie 2017 govt paid £20m to do seismic surveys so companies would know where best to explore for oil & gas. ogauthority.co.uk/news-publicati…
Relatively small but could be used for frontier R&D for cleantech

2) production subsidies. Ie: tax rate for North Sea has been steadily cut from 2014/5 high to encourage production. WTO define this as subsidy. It’s worth billions over time to the industry. odi.org/sites/odi.org.… Contrast with VAT hikes for solar. theguardian.com/politics/2019/…

3) generation subsidies. Ie UK capacity market directly subsidises fossil fuel generators to exist, or it did until the European Commision said it was illegal. odi.org/sites/odi.org.…
Meanwhile, you try getting the Swansea tidal lagoon built - too expensive apparently.

4) consumption subsidies. Ie no fuel duty on airline fuel and 5% on red diesel. Every time chancellor doesn’t push up fuel duty by 1p he foregoes half a billion quid a year. Tax should increase and be earmarked for making buses free, for example.

6) externalities. We all pay for NHS which treats victims of dirty air, for example. Huge implicit subsidy. Biggest chunk of the IMF’s £20bn UK subsidy estimate is lack of CO2 tax set anywhere near a level to recoup its guesses at costs (not best way to do it but not the point)

7) export credits. Taxpayers give loans and guarantees to UK FF companies to exploit other countries’ oil. Far more than for renewables. Govt says this is cos more demand for former than latter. Could signal market change by ending former by year 2021. parliament.uk/business/commi…

& there are others. Ie effect on the cost of capital - the single most important variable in energy systems costs to 2050 - every time any kind of policy or rhetorical support for fossil fuels is given by a minister. Or taxpayer on hook for decommissioning. Or museum sponsorship.

Actually the thing that is often counted as a FF subsidy but isn’t one IMO is 5% VAT on home energy use. The intention of that policy is to stop poor people dying of cold, and it’s only because our energy mix isn’t zero carbon that that happens to mean cheaper FF use.

Which leads to final point. Removing FF subsidies can not really be done overnight. Each needs to be phased out & reversed in way consistent with social justice, which will vary. But for as long as we’re using Treasury to *conciously* back fossil fuels, we’ve got a problem.

yes yes I know I missed a number out.

In case you’re wondering the missing one was ‘military’. Ie - we fight very very expensive wars or interventions in at least partial service of oil interests or oil price.