Looking for $1 trillion to spend well? Eliminate fossil fuel subsidies.
You know how sometimes you decide to Google something totally random that’s on your mind and see what comes up? Well, the other day “1 trillion dollars” was on my mind, and I decided to Google it. Well, turns out you get some interesting results when you Google “1 trillion dollars”, if you can look past all of the talk about the US deficit.
I learned that if you stacked one trillion dollar bills on top of each other, they would go a third of the way to the moon. That’s insane. Do you realize how thin a dollar bill is?
I read something about how the system we use for writing numbers is both incredible and challenging because of how easily you can represent incredibly huge numbers. It’s true — 1,000,000,000 looks not all that much less than 1,000,000,000,000 if you just glance at them. And even if you look at them more closely, the billion vs. the trillion don’t look allllll that much different, right?
Well, turns out they are. 1 trillion dollars is really really big. No, it’s really really really really really really big. When you think about it as an amount of money it’s truly mind-boggling. You think one billion is big, per chance? Well one trillion is a THOUSAND of those! Maybe you’re more modest and think a million dollars is a pretty large sum of money. Well, a trillion dollars is one million million dollars. Or, a million squared. Confusing? It should be. It’s nearly incomprehensibly huge.
So that’s why the new fact sheet just released by Oil Change International is so scary and infuriating at the same time. It shows that on an annual basis, the fossil fuel industry now receives something on the order of $1 trillion globally from government subsidies (aka handouts).
That’s right…that mind-boggling amount of money? It’s going to the industry that is both raking in record profits and also destroying our planet with dirty extraction, oil spills and toxic air, and of course global warming-causing greenhouse gases.
Generally, subsidies are on either the production side (making the cost of production cheaper), or the consumption side (making the price of fuel cheaper to the consumer). In the US and the rest of the industrialized world, we generally have production subsidies, which also serve as corporate welfare to the oil, gas and coal industries, who return the favor with lavish campaign contributions. But in the developing world, consumption subsidies, which in theory should make access to energy and fuel affordable to the poor, are far more common.
The problem is…the theory is wrong. Those consumption subsidies don’t generally end up helping the poor. So we need to eliminate them, replace them with real policies to ensure energy access for all, and of course we need to stop giving the world’s richest companies more incentives to make even more money.
The public is starting to wake up to the absurdity of these wasteful subsidies. In just the few days since its recent launch, over 600,000 people (and growing) have signed an Avaaz petition calling on leaders to make progress on this important issue. Key figures are speaking out on the need to eliminate these subsidies.
In 2009, G20 leaders committed to phase out these subsidies. But unfortunately, their commitment hasn’t turned into action, so it’s time to help light the way. Over 75 NGOs have recently come together outlining a few key steps that should be taken in the coming months at the next G20 and also at the upcoming Rio+20 summit to move forward in eliminating fossil fuel subsidies.
- First, governments should set themselves a deadline for getting rid of these subsidies. Seeing as it’s been 3 years since the G20 committed to phasing them out, 2015 seems to be a good date — that’d be a good 6 years after these 20 leaders committed their governments to doing so.
- Second, folks like Oil Change International and other NGOs shouldn’t have to spend lots of time and investigative skills to discover this trillion dollars sitting out there being spent in bad ways. It’s a huge amount of money and governments should be willing to admit they are sending it in support to fossil fuel industries around the world. So, it’s time for governments to be more transparent and consistent in their reporting of fossil fuel subsidies.
- Thirdly, support needs to be provided to developing countries and protections established to ensure the poor and vulnerable are safeguarded from unintended consequences to removing these subsidies. While some suggest that fossil fuel subsidies are aimed at providing energy access to the poor, studies have shown that less than 10% of these subsidies actually benefit the poor. Nevertheless, it’s important that poor countries and communities are supported while these subsidies are phased out.
- Finally, governments should work together to shift these subsidies from fossil fuels to more useful endeavors. We and other NGOs are calling on governments to create a way to encourage this cooperation — a center of excellence for fossil fuel subsidy removal, if you will. This center would help governments be honest in their reporting of these massive subsidies and coordinate global efforts to get rid of them.
Luckily, there are a number of opportunities on the horizon for government leaders to commit to these three simple steps. One opportunity was just passed by this weekend, as the G8 leaders released only a reiteration of existing pledges on this issue. But in June, the G20 will meet as they do each year, this time in Mexico, where a climate law was just passed that commits the Mexicans to removing their subsidies. Just days later, the whole world will be convening in Rio for the Rio+20 global sustainability conference. These two opportunities are prime opportunities to launch a global effort to live up to the commitments already made by the G20 and get rid of these inefficient and massive subsidies once and for all.
Just think, with a little effort we could have US$1 trillion to help fund a transition to a safer future. Seems like it’d be a great head start, if you ask me.