Second of two parts
James Ellsmoor, a former contributor to Forbes magazine and founder of the Virtual Island Summit, wrote: “The United States spent 10 times more (money) on fossil fuel subsidies than education.
“The combination of the fossil fuel industry’s investment within its sector and the high profit margins have led many companies to protect their subsidies. The fossil-fuel lobby actively has worked in many countries to protect their subsidies and avoid the imposition of carbon taxes. Doing so protects their profits.
“Whilst cheaper renewable energy creates more competition in the energy markets, it decreases the cost-effectiveness of fossil fuel subsidies. Simon Buckle, the head of climate change, biodiversity and water division at the Organization for Economic Co-operation and Development explains: ‘Subsidies tend to stay in the system and they can become very costly as the cost of new technologies falls. Cost reductions such as this were not envisaged even 10 years ago. They have transformed the situation and many renewables are now cost- competitive in different locations with coal.’
“Buckle’s analysis of the inefficiency of fossil-fuel subsidies is illustrated best by the United States’ expenditure: The $649 Billion the U.S. spent on these subsidies in 2015 is more than the country’s defense budget and 10 times the federal government’s spending for education . When read in conjunction with a recent study showing that up to 80% of the United States in principle could be powered by renewables, the amount spent on fossil fuel subsidies seems even more indefensible.
“International Monetary Fund (IMF, a global organization of 189 countries) leader Christine Lagarde has noted that the investments made into fossil fuels could be better spent elsewhere, and could have far reaching positive impacts: ‘There would be more public spending available to build hospitals, to build roads, to build schools and to support education and health for the people. We believe that removing fossil fuel subsidies is the right way to go.’
“The Nabors Alaska Drilling Inc. CDR2 AC oil drill rig is moved along a road in the North Slope in… [+] Prudhoe Bay, Alaska. Four decades after the Trans Alaska Pipeline System went live, transforming the North Slope into a modern-day Klondike, many Alaskans fear the best days have passed.
“Although some nations are taking steps to reduce their reliance on fossil fuels and cutting back on investment within those industries, others are not. Domestic policies are largely responsible for the continued support for the fossil fuel industries. Yet, with the continued drop in the costs of renewable energy, private entities are taking over and ensuring that the clean energy transition continues despite the unwavering support the fossil fuel industry receives from both governments and businesses.
“Renewable energy is set to overtake fossil fuels as the energy source of the future, with or without the subsidies paid for coal, petroleum, and natural gas. Fossil fuel advocates long have made the case that removing direct and indirect subsidies would be damaging to the global economy, but the IMF clearly disagrees,” Ellsmoor wrote.