Tax breaks for fossil fuels worth $9.1 billion

You couldn't make it up! A report from the OECD shows we're spending $9.1 billion on tax subsidies for fossil fuels. That's about $7.50 / year for each of us, just in the few selected industries that the report has looked at.

They're still working on figuring out the total, which is likely to be much larger. See the helpful comment below from Ron Steenblik, one of the authors.

Similarly, The Global Subsidies Initiative (an interesting institution in itself ...) suggests that fossil fuel subsidies outside the OECD are worth around $400 million, or getting on for $15 per person every year. As shown in the table, that's nearly 10 times the total subsidy available for renewables.

Finally, the OECD team has also estimated that removing subsidies to fossil fuels across all developing and emerging economies (I think this is the region where they have the best data) could cut global greenhouse gas emissions by 10%. And as we've seen before on this blog there are not many policies with that kind of potential.

Click here for the report this table comes from.

It's official - we've gone soft

June 2010 Chart of the Month


For over 30 years now, our partners at BRE have been collecting data on average indoor temperatures in the UK. What they've found is that over time we're heating our homes to higher and higher temperatures, from about 13° C in 1970 to over 20° C in recent years. And all this during a period where the weather, if anything, has been slightly warmer than it used to be.


Of course, one thing that has changed since 1970 is that a lot more people have central heating. So what I like about this chart is that it separates out this effect: all else equal, the chart shows that the spread of central heating would have increased indoor temperatures only to about 15° C by 1970 standards. The rest of the increase (by rough calculation about 70% of it) is just behaviour. We've gone soft!

The Energy Saving Trust says that turning down the thermostat down by 1° C cuts your heating bill by 10% on average. So what we're really seeing here is the long run trend of rising incomes and falling relative costs of energy. Which if you're worried about these things, would get you thinking again about pricing.


The data source is here for those that are interested. 

First fall in energy use since 1982

The source is BP's Statistical Review of World Energy. You can read an interesting if cynical critique of this report by Jeremy Leggett in the Financial Times, arguing that the statistics are a cover up and that an 'energy crunch' is upon us.

Relatedly, BP do publish some data about Jeremy's area, solar PV. Solar PV grew nearly 50% in 2009, which is surely good news. But total capacity is still only enough to meet about one twentieth of 1% of global demand for electricity. So Jeremy's article just offers a reminder of how little protection we really have against the energy-crunch scenario.

High Impact, Low Frequency?

The BP oil spill has got us all thinking about low frequency, high impact events. But some people have been thinking about these things for quite a while, including the team at NERC - the North American Electric Reliability Corporation. Who knew such an institution even existed? Their job apparently is to worry about unlikely events that would be really, really bad if they ever came about.

The latest NERC report includes a detailed section on geomagnetic storms:

The analysis indicates that the [geomagnetically induced current] in over 350 transformers will exceed levels where the transformer is at risk of irreparable damage...  Such large scale damage could lead to prolonged restoration and long-term chronic shortages of electricity supply capability to the impacted regions, arguably for multiple years.

In other words, a really big storm could roast enough components (70-80% of transformers in some states) to put the lights out for years. A version of this event happened in March 1989 and knocked out parts of the Canadian grid for most of a day. But since then, the grid has been developed in ways that make it more vulnerable than before: essentially, higher voltage transmission means geomagnetically induced currents can travel further and do more damage.

From a different angle, we could perhaps get a similar effect from a high altitude nuclear explosion. Here's a photo of the last time we had a go at one of those. This one was 400km in the air but the electromagnetic pulse was enough to blow out the streetlights in Hawaii, 1500km away.

(This is the 1962 Starfish Prime explosion.)

Why energy policy has failed

This year's Godkin lecture by John Deutch is worth watching. Deutch was US Undersecretary for Energy in the 1970s, so he has some interesting long term perspectives. He reminds us for example of Carter's target for 20% of energy to be generated from renewables by the year 2000. We continue to set similar targets as if this was a new idea. As Deutch says: "Aspirational goals are rarely accompanied by serious analysis that indicates how the goals will be credibly achieved."