lecture note 6

Most subsidies come from its poor and middle income

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Unformatted text preview: s emissions. Most subsidies come from its poor and middle-income members (see chart). The International Energy Agency reckons that poor countries, defined as those outside the Paris-based Organisation for Economic Co-operation and Development (OECD), spend $310 billion a year on such subsidies, mainly for petrol. That supposedly helps the poor. But Fatih Birol, the IEA’s chief economist, says that the subsidies mainly benefit middle-income and higher-earning urban types; the rural poor use little fossil fuel. The G20 said the money spent on subsidies could help the poor in other, more effective, ways. Subsidising fossil fuels has many flaws. If imported, they may increase a country’s energy dependence on risky outside supplies. In big oil-producing countries, such as Iran (which is not a G20 member) and Saudi Arabia (which is), subsidies are especially high. They drain public coffers and encourage wasteful domestic consumption, using petrol that could be better sold for export. Rich countries subsidise fossil fuels too, but by much less—the OECD estimates around $20 billion-$30 billion annually. A new report by the Environmental Law Institute, a think-tank, says that America spent $72 billion on fossil-fuel subsidies from 2002 to 2008. But these are production subsidies. American oil companies earn a tax credit at home for royalties (of up to 85% in some cases) paid on...
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This document was uploaded on 03/09/2014 for the course ASTRO 3730 at Colorado.

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