G20 countries pay over $1,000 per citizen in fossil fuel subsidies, says IMF

Thursday, August 6, 2015

Subsidies for fossil fuels amount to $1,000 a year for every citizen living in the G20 group of the world’s leading economies, despite the group’s pledge in 2009 to phase out support for coal, oil and gas.

New figures from the International Monetary Fund (IMF) show that the US, which hosted the G20 summit in 2009, gives $700bn a year in fossil fuel subsidies, equivalent to $2,180 for every American. President Barack Obama backed the phase out but has since overseen a steep rise in federal fossil fuel subsidies.

Australia hosted the most recent G20 summit, where prime minister Tony Abbott was forced to reaffirm the commitment to the phase out, but it still gives $1,260 per head in fossil fuel subsidies.

The UK, which is cutting renewable energy subsidies, permits $41bn a year in fossil fuel subsidies, which is $635 per person. In contrast, Mexico, India and Indonesia, where per capita subsidies average $250, have begun cutting fossil fuel support.

The vast fossil fuel subsidies estimated by the IMF for 2015 include payments, tax breaks and cut-price fuel. But the largest part is the costs left unpaid by polluters and picked up by governments, including the heavy impacts of local air pollution and the floods, droughts and storms being driven by climate change.

The IMF, which published a global estimate – $5.3tn a year – of fossil fuel subsidies in May, calculates that ending fossil fuel subsidies would slash global carbon emissions by 20%, a huge step towards taming global warming.

Ending the subsidies would also prevent 1.6m premature deaths from outdoor air pollution, a 50% cut. The money freed by ending fossil fuel subsidies could be an economic “game-changer” for many countries, says the IMF, by driving economic growth and poverty reduction.

“The [new] figures reveal the true extent to which individual countries are subsidising pollution from fossil fuels,” said Lord Nicholas Stern, an eminent economist at the London School of Economics. “The failure to reflect the real costs of fossil fuels in prices and policies means that the lives and livelihoods of billions of people around the world are being threatened by climate change and local air pollution.”

“In particular, these figures reveal that the G20 countries are wasting trillions of dollars each year on subsidies for fossil fuel pollution,” Stern said. “It is time for the G20 to recognise that the extent of subsidies is far greater than has been previously understood, and to honour their commitment.”

Stern criticised the UK government’s recent attacks on renewable energy subsidies: “The government should remember that if it wants to cut the subsidies for low-carbon energy, it should cut the subsidies for fossil fuel pollution that are at the core of the problem for which clean technology is the sensible and attractive solution.”

In July, Stern estimated that tackling climate change would require investment of 2% of global GDP each year. The IMF work indicates that ending fossil fuel subsidies would benefit governments by the equivalent to 3.8% of global GDP a year.

Christiana Figueres, the UN’s climate change chief charged with delivering a deal to beat global warming at a crunch summit in December, said: “The IMF data reveal a simple and stunning truth: that fossil fuel subsidy reform alone would deliver far more funds than is required for the global energy transformation we need to keep the world below a 2C temperature rise [the level governments have promised to hold them to].”

In April, the president of the World Bank, Jim Yong Kim, told the Guardian that it was crazy that governments were still driving the use of coal, oil and gas by providing subsidies. He said they should be scrapped immediately as poorer nations were feeling “the boot of climate change on their neck”.

The new IMF data show that national fossil fuel subsidies are significant – about the same as defence spending – when compared to national GDP in the US (3.8%), Australia (2.0%) and UK (1.4%). In nations with severe air pollution problems, the subsidies are an even higher as a proportion of GDP, such as China (20%), India (12%) and Ukraine (60%).

The countries with the highest fossil fuel subsidies per person are the middle eastern oil states, with subsidies in Qatar amounting to $6,000 a year and those in Saudi Arabia $3,400. The UAE gives $3,000 a head, but announced on 22 July it was ending its $7bn-a-year petroleum subsidies.

Fossil fuel subsidy reforms are beginning in dozens of countries, including India where subsidies for diesel ended in October 2014.

“You could look at the glass as half empty or half full,” said Ian Parry, the IMF’s lead green taxes expert. “There are some encouraging signs, such as reforms in Mexico, India and Indonesia, and 40 countries now have some form of carbon pricing, albeit typically at a too low level. On the other hand, these schemes cover only 12% of global carbon emissions, so we are an awful long way from where we need to be. We are at base camp.”

Parry defended the inclusion of the costs of air pollution and climate change impacts in the IMF’s subsidy estimates: “We think that energy prices need to cover both the production and environmental costs. This is largely in countries’ own interest, as many of the environmental costs, like air pollution, are local.” Lord Stern said the IMF had actually underestimated the costs of global warming.

Fossil fuel subsidies can benefit some of the poorest in the world, but Parry said: “There are much more efficient ways to address those concerns. Most current benefits, from holding down energy prices, are poorly targeted, with much going to higher income groups.”

The article G20 countries pay over $1,000 per citizen in fossil fuel subsidies, says IMF appeared first on HowMany.org - Population growth and the Environment - How overpopulation affects the U.S. and the World.

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U.S. Gas Exports: The Pipe Dream

Wednesday, August 5, 2015

In a recent article in Natural Gas Europe, Gal Luft wrote:

The Obama Administration is often accused of being sluggish in granting permits for projects to ship liquefied natural gas (LNG) to countries that do not have a free trade agreement with the U.S. Critics claim it has thus denied the U.S. a historical opportunity to become a leading natural gas exporter on par with Russia and Qatar. Whether ten approvals out of forty applications in four years is sluggish or not is a matter of perspective. But the debate on the pace of approvals has masked a much more important fact: American gas is no longer desired abroad, no matter how many permits are granted, and certainly not in Asia — the fastest growing market for gas.

Here is why: LNG prices in Asia are linked to oil prices; when oil prices were high Asian economies were forced to pay exorbitant prices for their imported gas. In the case of Japan where the Fukushima incident led to the shutdown of 54 nuclear reactors, at one point LNG prices reached almost $20 per one million British thermal units (mmbtu). During that time the North American fracking revolution unleashed a huge amount of gas into the market, creating a fantastic opportunity for the U.S. gas industry to capture the arbitrage between Asian and North American prices and export daily billions of cubic feet to foreign destinations. So promising was the LNG play that a 2014 report by Citi Group projected that the U.S. would become the world’s leading LNG exporter by as early as 2020.

But ironically the same fracking miracle that flooded the North American market with surplus natural gas also led to a spike in oil production and contributed to the fall in global oil prices. Since oil and gas prices are linked the collapse in oil prices led to an even sharper decline in LNG prices. LNG spot prices in Asia have recently fallen below $7/mmbtu, a level nearly one third of last year’s peak. While at the well head U.S. gas price — below $3/mmbtu — is among the cheapest in the world, when slapped with liquefaction and tolling costs the price could reach $9/mmbtu, no longer competitive in many markets including Asia. The slowdown in China’s growth, the European recession, the restarts of Japanese nuclear power plants, the rise in Australian LNG exports, the new gas pipelines China and Russia are planning to build in Siberia and the specter of Iranian gas entering the market once the sanctions are lifted all mean that in the foreseeable future America’s gas may not be attractive for most buyers.

With the dream of becoming a major player in the Asian market quickly fading the U.S. should consider alternative uses for its gas. America's immediate neighborhood, the Caribbean basin and Central American markets, could be the first markets for America's gas. Many of those countries — Granada, Jamaica, Barbados, Nicaragua and Cuba to name a few — still generate large portions of their electricity from oil products and their economies are susceptible to occasional oil shocks. The same is true for Puerto Rico which is effectively bankrupt and could benefit greatly from switching its power sector from oil to natural gas. But most of those markets are too small and too poor to justify the construction of LNG receiving terminals where LNG is re-gasified into dry gas that can power electricity turbines. For such regional markets the gas can be delivered in the form of low pressure Compressed Natural Gas (CNG) on board dedicated vessels. This way the gas can simply be shipped in its gaseous form without having to go through a costly and energy intensive conversion into liquid and then back into gas. Moving gas in CNG vessels would offer the U.S. gas producers new nearby markets while sparing the customers the need to invest billions of dollars in LNG infrastructure.

The second potential market for America’s gas is the transportation sector. While a large amount of gas is used for power generation, with important economic and environmental benefits, only one percent of U.S. natural gas is used as automotive fuel. This is a real folly. Even at the currently depressed crude prices North American natural gas is still three times cheaper than oil on an energy content basis. But despite the cheap price of our gas, the U.S. is home to only about 150,000 of the world’s roughly 18 million natural gas vehicles. In China, where natural gas prices are 3-4 times higher, gas is used much more widely in vehicles. A new report by the United States Energy Security Council reveals that though China’s overall vehicle fleet is half the size of America’s it has ten times more natural gas vehicles and twice as many natural gas refueling stations than the U.S. Furthermore, China is in the process of converting its vehicle fleet to run on methanol, an alcohol fuel that can be made from natural gas as well as coal and biomass. Indeed, though poor in gas China seems to be utilizing the resource better than the gas-rich U.S.

The answer to the North American gas glut isn't building multi-billion dollar LNG terminals along U.S. coasts with the hope of exporting gas to distant markets where it is no longer wanted. Promoting innovative approaches to exporting gas to our neighbors in configurations other than LNG and advancing fiscally conservative solutions to opening the transportation sector to natural gas-derived fuels are the only ways for U.S. natural gas producers to ensure that if they continue to drill for more gas there will be takers.

Gal Luft is co-director of the Institute for the Analysis of Global Security (IAGS) and Senior Adviser to the United States Energy Security Council (USESC). He is also co-chairman of the Global Forum on Energy Security.

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Fuelverine

Monday, July 27, 2015

John Brackett, the engineer who shows you how to hack your car's computer in the movie PUMP, has created an interesting web site loaded with great information. Check it out: Fuelverine.

On the web site, Brackett writes:
I created this site to give you a choice, because your government and the car manufacturers keep pretending you don’t have one. With the latest EPA regulations, $5,000-15,000 per vehicle is added just in emissions control systems to keep that dirty gasoline from polluting our atmosphere. With alternative fuels, most of these components wouldn’t be needed. There are half a dozen other fuel choices that could be made locally, burn cleaner, create local jobs, improve infrastructure and provide true energy independence. But why are we not allowed to use them? Is it a chicken vs the egg problem? Yes. Is it a technical problem? Not in the slightest. Is this your problem even if you don’t have a car? Yes. Everything in our economy is tied to the cost of oil and transportation, which is controlled by a monopoly, lobbyists, and your government. Do you realize every taxpayer spends $5,700 per year in subsidies for the oil companies… who are making record profits while our country goes more in debt. In whose interest is it that we don’t have fuel choice?

Everything on a car will break, and if it doesn’t, the bolt next to it will. Then you have to heat, cut, grind, lather, repeat. It’s an endless cycle and if you don’t do your own car work, will usually cost you a grand per visit for what used to be simple tasks. This story is only going to get worse over the upcoming years. So much so, that I don’t believe people will be able to afford a vehicle at current trends, especially when gas goes back to $5/gallon, which it will.

So who am I to tell you what to do? My education is in Mechanical Engineering with a concentration on Automotive Engineering. With the guidance of some brilliant minds, I’ve been able to run engines on a dozen fuels cleanly and reliably. Now it’s your turn to learn what you can do to enable your own fuel choice and start demanding a change.

Check it out: Fuelverine.

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