Despite experts recommending that G20 nations end these subsidies to coal industry on the grounds that promote the negative effects of climate change, industrialized countries continue to subsidize polluters.

SIDNEY – Instead of investing in so-called clean energy sources Australia has offered 3,500 million euros annually for companies to explore and extract coal mines in the country. Subsidies will be given in the form of direct spending and tax breaks, according to a report released today.

The report The bailout of fossil fuel” was prepared by the Overseas Development Institute and the organization Oil Change International for the G20 summit that will be held on 15 and 16 November in the Australian city of Brisbane.

The paper recommends that G20 countries end these subsidies on the grounds that they promote environmental pollution which could be curbed if countries divested their monies to develop true alternative energy sources.

It also indicates that the explorers of gas, oil and coal in the countries of this bloc already receive 88 billion dollars annually through grants, loans and tax deductions.


According to the report, the US and Australia have the highest levels of national expenditures for exploration subsidies through direct spending or tax exemptions.

In response, the Mineral Council of Australia said the government funding and tax breaks for exploration are not subsidies but legitimate tax deductions for businesses.

“Governments are propping up the development of oil, gas and coal reserves that cannot be exploited if the world is to avoid dangerous climate change,” say Overseas Development Institute (ODI) and Oil Change International (OCI) in the report.

“Furthermore findings show that by providing subsidies for fossil-fuel exploration, the G20 countries are creating a ‘triple-lose’ scenario. They are directing large volumes of finance into high-carbon assets that cannot be exploited without catastrophic climate effects. They are diverting investment from economic low-carbon alternatives such as solar, wind and hydro-power. And they are undermining the prospects for an ambitious climate deal in 2015.”

According to ODI and OCI, G20 nations, the ones that spend the most time calling for action on climate change, called for the end of ‘inefficient’ fossil fuel subsidies back in 2009, but they are also the countries that invest the most money on carbon emitting industries such as coal and oil.

New research finds that G20 governments are spending upwards of $88 billion a year supporting exploration of coal, which is more than double what the oil and gas companies are investing.

“The evidence points to a publicly financed bailout for carbon-intensive companies,” says the report, and support for “uneconomic investments that could drive the planet far beyond the internationally agreed targets.”

Separate spending reports focused on specific countries were prepared by ODI and OCI regarding expenses on what they call carbon-intensive activities. Both organizations have issued reports on Australia, Germany, India and Italy among others.

According to the report prepared for the G20 meeting, half of the money invested in oil, gas and coal, about $49 billion a year, would be more  than enough to provide electricity to 1.3 billion people who lack that service today.


“Australia’s annual budget of $4 billion in subsidies for big oil, big gas and coal mining could power half of the homes in Queensland with solar energy” says the report.

But the Australians are not the only environmental offenders. The new report also cites the United Kingdom, Brazil and the United States as countries that could divest their expenditures used to subsidize traditional energy sources to truly help in the spread of alternative ones.

In  the UK, for example, the 1.2 billion pounds spent on traditional energy sources could power half of the homes in Manchester with wind energy, says the report. In the United States, $6.5 billion could help finance solar energy projects that would power all Washington DC homes; and in Brazil, $12 billion a year – three times the money spent in social welfare – which are currently being used to support the fossil fuel industry, could be invested in projects that promoted the use of alternative energy sources, which would additionally create jobs for a large portion of the population.

The report identifies three types of exploration subsidies: investment by state-owned enterprises which amounts to $49 billion a year; investment through direct investing and tax breaks which add up to $23 billion a year; and public financing through banks and other financial institutions, that accounts for another $16 billion a year.

According to the report. financial aid to traditional polluters in other parts of the world ranges between $2.5 billion in countries like Russia and Mexico to $17 billion in Saudi Arabia. Canada China, Japan, the Republic of Korea and Russia invest large amounts of money financing the exploration and extraction of fossil fuels not only in their own countries, but also in third world nations.

This explains why the so-called environmental movement led by G20 nations which calls for the reduction of fossil fuels in order to combat climate change is just a charade. While G20 nations ask developing nations to commit to sacrifices in the name of saving the planet from runaway global warming, their corporations are heavily subsidized by governments that seen to explore and extract the planet’s resources for their own benefit.

The latest ODI and OCI report recommends that G20 nations end their exploration subsidies as a first step towards ending fossil fuel phase out as well as to commit to ending bilateral and multilateral financing of the fossil fuel industry. The organizations also call for the transfer of exploration subsidies to low carbon enterprises, which would support the transition to universal energy access.

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