We doubled public fossil fuel subsidies in 2021

More and more subsidies for fossil fuels according to the International Energy Agency, but renewables are the only solution to help consumers.

Global public subsidies to fossil fuels they almost doubled in 2021, reaching the figure of 700 billion dollars.It is the result of theanalyses made by the International Energy Agency (IEA).Since the Covid-19 pandemic, subsidies have increased dramatically:on the one hand, therefore, governments inject public money to protect citizens from the increase in energy prices, on the other they economically support the profits of companies of gas and oil.And due to the protracted war in Ukraine, it is expected that in 2022 the subsidies will increase further.

From advantage to disadvantage:a mechanism that distorts the market

The agency's analysis covers 51 key countries and represents 85 percent of the world's total energy supply.The IEA had stated, in May 2021, that if countries want to achieve climate goals they do not have to be authorized new fossil fuel extraction and production projects.

But, due to incentives, extracting oil and gas is worthwhile.Furthermore, research shows how most of these incentives have been used to reduce the final price of energy, the one that weighs on consumers' pockets.What may seem like a measure to the benefit of citizens actually turns out to be a mechanism that distorts the market:according to the IEA, in fact, this benefits the richest families, who are also those who use the most energy, rather than supporting the lowest incomes.

The only solution is energy from renewable sources

“Fossil fuel subsidies they are an obstacle to a more sustainable future.Increased investment in clean energy technologies and infrastructure is the only lasting solution to today's global energy crisis and the best way to reduce consumer exposure to high fuel costs,” he said Fatih Birol, director of the International Energy Agency.

“A period of soaring fossil fuel energy prices, in which oil and gas companies they are reporting record profits, it should be an ideal time for governments to eliminate subsidies for fossil fuel production.Instead, witnessing their growth is irritating to say the least,” Gyorgy Dallos told Greenpeace International.

Fossil subsidies cost $11 million per minute

Of the $697 billion, most are “explicit” subsidies, meaning price cuts, government funding and tax breaks.This figure does not include implicit subsidies, i.e. the costs resulting from climate damage and air pollution caused by fossil fuels, otherwise we would be talking about much larger numbers.In particular, the estimates of the International Monetary Fund spoke of 5,900 billion in 2020, i.e. an expense of 11 million dollars a minute.

In Italy, the profits of the balance sheets of energy companies went from 1.3 billion in the first quarter of 2021 to 5.2 billion in the first quarter of 2022 according to the economic-financial newspaper Il Sole 24 Ore.Despite the huge profits, energy companies in Italy – including Eni, Edison and Enel – can count on 11 billion euros in subsidies paid by the Ministry of Economy and Finance only in the period from October 2021 to March 2022.

Broken promises on fossil fuel subsidies

It was 2009 when the G20 decided to phase out subsidies to fossil fuels.In 2016, the G7 set a deadline of 2025, but there has been no progress.In July this year, the British newspaper Guardian revealed that the oil and gas sector achieved an average of 1,000 billion per year in pure profit over the last 50 years.According to Aviel Verbruggen, the author of that analysis, these large sums have given the companies themselves the power to delay action on the climate crisis.

But even without subsidies, the energy crisis is proving extremely profitable for oil companies:in the first six months of 2022, five big oil – BP, Shell, ExxonMobil, Chevron and Total – they made profits of around 100 billion dollars.The same amount that rich nations had promised to poor nations by 2020, to help them tackle the climate crisis.An amount that was never delivered.