Transport sucks up nearly half of Europe’s fossil fuel subsidies, report finds

The European Commission is due to present a clean transport strategy in November, including a tightening of an existing cap on CO2 emissions from cars and brand new rules, which for the first time, will limit CO2 emissions from trucks. [jonbgem / Flickr]

European countries spend more than €112 billion per year subsidising oil, gas and coal production or consumption – including tax breaks on highly-polluting diesel – despite a pledge to phase out fossil fuels completely by 2020.

The transport sector was the main beneficiary, with more than €49bn used to support the use of fossil fuels, according to a report published today (28 September) by the Overseas Development Institute and Climate Action Network (CAN) Europe.

The report for the first time monitored the subsidies spent on fossil fuels such as oil, gas and coal between 2014 and 2016 across 11 European countries and the EU itself – including the Czech Republic, France, Germany, Greece, Hungary, Italy, Netherlands, Poland, Spain, Sweden and the UK.

Overall, the transport sector received 44% of the total government support identified, including tax breaks to reduce the price of diesel, which scientists have linked to premature deaths from air pollution.

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“This study shows how governments in Europe and the EU continue to subsidise and finance a reliance on oil, gas and coal, fuelling dangerous climate change and air pollution with tax-payers’ money,” said lead author Shelagh Whitley, Head of Climate and Energy at ODI.

The European Commission is due to present a clean transport strategy in November, including a tightening of an existing cap on CO2 emissions from cars and brand new rules, which for the first time, will limit CO2 emissions from trucks.

Truck emissions are currently unregulated in Europe, contrary to the US, Canada, Japan and China, which have fuel efficiency standards already in place. They are currently “the forgotten elephant in the room,” according to experts, accounting for 35% of transport-related CO2 emissions across the globe, almost as much as cars.

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Europe lags behind the major world economies in regulating fuel efficiency standards for the fast-growing truck transport sector and the Commission is moving to address the issue with legislative proposals, a panel on the Future of Road Freight Transport was told on Monday (3 July).

The report also highlighted the gap between European commitments to phase-out fossil fuel subsidies by 2020, in compliance with the Paris Agreement on climate change, and the huge amount of subsidies it still provides to the production and consumption of oil, gas and coal.

The EU itself provided an annual average of €4bn in fossil fuel subsidies through its budget and financial institutions, the researchers said, underlining the support for gas and coal-fired power generation as being of particular concern.

And subsidies continue to be provided for fossil fuel exploration, with the UK and France providing €253 million per year between 2014-16 on finding new resources, the report found.

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“The €4bn spent by the EU on fossil fuels, most of which goes to gas infrastructure, locks Europe into fossil fuel dependency for the decades to come,” warned Wendel Trio, director of CAN Europe. “This violates the Paris Agreement’s requirement to make finances work for the climate,” he said.

In July, a high-level group of experts from the world of banking and finance issued a similar warning, saying companies that continue to invest in oil, gas and coal will end up sitting on “stranded assets” that will weigh heavily on their balance sheets, and compromise the stability of the global financial system.

Instead, public money should be geared towards “only supporting renewable energy and energy and resource efficiency”, the report said, calling on the EU to “explicitly exclude fossil fuels and other unsustainable projects” from public funding.

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A group of financial experts has set out their vision for hardwiring sustainability goals into the European Union’s financial system, calling on 28-country bloc to stop pouring public money into polluting fossil fuels and focus spending on clean energies instead.

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