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Why is Oettinger scared of fossil fuel subsidy figures?

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fossil fuelsCommissioner Günter Oettinger’s blocking of a transparent discussion on fossil fuel subsidies inevitably raises suspicions that his real intent is to preserve them, writes Sébastien Godinot.

Sébastien Godinot is an economist for WWF Europe. 

Those making the case for adequate post 2020 EU climate and energy legislation were looking forward to the European Commission launching, in the coming days a communication on the European electricity market. For the first time, an official document would disclose clear figures for all energy subsidies, including fossil fuels and nuclear energy.

However, this was before a draft, leaked to the German newspaper Sueddeutsche Zeitung, revealed that Commissioner Oettinger has tried to delete key figures put forward by his own staff.

The reason behind this apparent doctoring of the figures is that the methodology behind the calculations is not accurate enough.  However, this has been known for almost a decade, since the European Environment Agency stated that « beyond the annual report of direct state aid for the coal industry, there is no harmonised reporting mechanism for energy subsidies”.  No one, including Commissioner Oettinger, has sought to fill in this important knowledge gap.

While the exact level and nature of energy subsidies are indeed difficult to assess, progress is being made.  Since the G20 called for a phase-out of inefficient fossil fuel subsidies in 2007, the OECD and the UNEP have worked hard to assess fossil fuel subsidies in all OECD countries – figures which are accepted and should be used proving that energy subsidies are indeed fathomable. The European Commission directly re-uses OECD figures and adds data for the few EU Member States that are not OECD members.

Interestingly, these proportions match those from 2001 when, according to a European Environment Agency (EEA) study, renewables received 19% of all energy subsidies while fossil fuels and nuclear got 81%. More unexpected is that they also match ratios for the 1990 to 1995 period, where the EEA again found that 74% of energy subsidies in Europe benefitted fossil fuels and nuclear, while renewables only received 7% of the total. This shows us that for decades energy subsidies have strongly favoured fossil fuels and nuclear power and continue to do so.

On this basis, total energy subsidies in the EU in 2011 amount to €26 billion for fossil fuels (+ €40 billion for related health costs), €35 billion for nuclear power, and €30 billion for renewables. This means that out of a total of €131 billion, renewables which are still in need of support to enter the market get a 23% share – whilst mature, unsustainable and old-fashioned energies get a huge 77% slice of the energy subsidy cake.

In its edition of 15 October, the Financial Times states that “the cumulative total that German consumers have spent subsidising green energy is set to pass €100bn next year, a symbolic mark that could fuel further political debate about the country’s costly energy transition to renewables.” Renewable subsidies are much more transparent than for other types of energy, so people particularly focus on them. But this is only a small part of the whole picture – what we should be asking is what have been the total energy subsidies for fossil fuels and for nuclear energy?

Green German electricity has been subsidised for slightly more than 10 years, while fossil fuels and nuclear power have been effective subsidy seekers for decades. The puzzling fact is that nobody knows exactly the cumulative amount of these subsidies. Even more astonishing is that high level decision makers – like Commissioner Oettinger – are apparently resisting to even find out the truth.  What else explains why Commissioner Oettinger is getting rid of what little evidence his staff provided through their research into the matter.

Research done by the think tank FÖS shows that for the period 1970-2012, cumulative state subsidies for hard coal and lignite in Germany reach a staggering €398 billion, followed by €213 billion for nuclear energy. Even in Germany, cumulative renewable subsidies are dwarfed by dirty energy subsidies.

The figures are in stark contrast to the often repeated assertion of Commissioner Oettinger complaining about the “high” cost of renewables and in favour of nuclear and fossil fuel as “cheap” sources.

Why is the subsidy issue so crucial in the European electricity debate?  Because the current discussion is almost entirely focused on the price of energy in general, and the level of support to renewables in time of austerity – but few really check the facts.

Commissioner Oettinger now has the opportunity to enable a more robust and transparent discussion based on a global understanding of energy subsidies and to debunk the myths of renewables. Surely this is a minimum requirement from the European Commission.

In this context, it is a shameful and unacceptable move to deliberately opt for non-transparency. One can only suppose it is  a conscious decision to continue protecting fossil fuel and nuclear lobbies while we know those energy sources remain massively (but discretely) subsidised despite their maturity.

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