To finally end the scourge of fossil fuel subsidies we must link up, organise, and get more radical
The oceans are rising - and so are public investments into fossil fuel production.
As taxpayer-funded oil, coal, and gas investment from G20 countries surpassed £1.1 trillion in 2022, we must ask: why is the fossil fuel industry still being subsidised by the public?
Subsidies are sums of money granted by the state or a public body to help an industry or business keep the price of a commodity or service low.
The state-led conversation around climate change focusses on the consumption habits of the individual. There is little attention offered to the skin-crawling quantity of money that is funnelled from the pockets of the working public, directly towards new fossil fuel production and wealthy shareholder profits.
Last Wednesday, Rishi Sunak weakened several policy targets that were part of the government’s plan to reach net zero, including supposedly “scrapping” proposals that would “interfere in how many passengers you can have in your car”, or “force you to have seven different bins in your home”.
Sunak’s attempt to position himself as a hero of the working man, who would never “impose these unnecessary and heavy-handed measures on the British Public”, comes off as shallow and deceitful – particularly when he directly follows up this tedious list of scrapped (made up) “policies”, with a quickly worded commitment not to ban new oil and gas in the North Sea.
Fossil Free London disrupt Shell AGM 2023 - Credit Fossil Free - London - Andrea Domeniconi
This commitment to not ban new oil and gas enabled the final round of licensing approval on Rosebank – the biggest undeveloped oil field in the North Sea. It will cost the British taxpayer an extra £3.75 billion. Not to mention its potential emissions – those will total the same as the 28 lowest income countries in the world combined.
So why aren’t we talking more about subsidies? Why is the public conversation steered toward supposed proposals that would have stopped Brits “going on holiday”?
Sunak’s family has been intimately linked to the fossil fuel industry through his wife’s share in IT firm Infosys, which hosts oil giant Shell as one of its top clients. Sunak’s wife owns a £690 million stake in the company, and collected an estimated £11.5 million in dividend payments in 2021.
With such a great capacity for massive profits to be enjoyed by Sunak, Conservative party donors, and wealthy shareholders, there is little motivation (aside from our collective destruction), to radically change the system the way we need to.
By continuing to subsidise the fossil fuel industry, profits for oil company bosses continue to skyrocket. Oil and gas giant Shell reported record-breaking annual profits in 2022, reaching £32.2 billion – a double in their profits since 2021. Oil executives at BP also celebrated record-breaking billions in profits in 2022, alongside companies like Exxon Mobil and Chevron.
BP AGM 2021 - Credit Fossil Free London
Such astronomical profits are only possible however, if they come from somewhere: so, they’re coming from the taxpayer. Rising energy bills and an astronomical cost of living aptly reflect the massive quantity of money being syphoned directly from the public.
In 2022, nearly 5,000 people died in the UK due to damp and cold homes. All in the same year that oil bosses boasted hundred-year-plus record-breaking profits, working people suffered, and died, because they could not afford to heat their homes. These two realities are intimately linked.
In order to achieve net zero targets (at a bare minimum), and prevent the absolute worst outcomes of climate and ecological collapse, all new oil and gas projects must be stopped, and fossil fuel subsidies must be phased out. In fact, the decision to phase out “inefficient” fossil fuel subsidies was made by the G20 as far back as 2009.
Yet, out of the £1.1 trillion in fossil fuel subsidies handed out by G20 governments last year, one-third (£359 billion) was put into new fossil fuel production. A report by the Institute for Sustainable Development (IISD) found that consumer fossil fuel subsidies saw a 475% increase in 2022. Analysts at the IISD also suggested that such investment could have helped bridge the gap in funding the clean energy transition.
But it didn’t. Why is that?
Plainly, there are massive profits to be made from the fossil fuel industry. Profits that would decrease with a swift energy transition – renewable energy is up to 9 times cheaper to produce, meaning that its profitability could be a lot smaller, if it is fairly distributed and priced.
Energy companies like Drax have pressured the UK government to provide even more public subsidies to their operations, threatening they will otherwise move production elsewhere.
Richard Damania, chief economist of a sustainability group at the World Bank, argued that there is “huge potential in subsidy reform”, and that by “repurposing wasteful subsidies, we can free up significant sums that could instead be used to address some of the planet’s most pressing challenges.”
So, fossil fuel companies are still being subsidised, when scientists, grassroots campaigners, and politicians continue to fervently urge against these publicly funded payouts. What can we do about it?
One of the first steps toward a positive solution involves acknowledging this element of the problem. Many members of the public are seemingly unaware of the extent to which tax-payer funded investments into fossil fuels are even happening – let alone the fact that they are increasing year-on-year.
We’ve tried petitions. We’ve tried letter-writing to MPs. We’ve tried peacefully marching throughout the cities of the world, year on year.
But time is not on our side. Neither are the wealthiest in our society.
Climate action groups such as Fossil Free London, Just Stop Oil, and This is Rigged, have been taking direct action in the UK to challenge the fossil fuel industry and the government’s continual capitulation to capital.
These groups have targeted the state actors and private companies fiscally and materially responsible for the climate and ecological crisis. In putting pressure on the state and private organisations for collaborating with climate destroyers, it is hoped that it will become politically unviable to support the fossil fuel industry.
Politicians should radically rally behind a call to cease all new oil and gas projects, re-invest fossil fuel subsidies into renewable energy, infrastructure, and introduce an energy price cap. An end to fossil fuel subsidies could be linked with a brand-new future – where all our needs are met, and the climate, and our ecosystems, can heal.
Mass grassroots campaigns will continue to end fossil fuel subsidies. Policies will continue to be put forth to accelerate our transition to net zero. We must rally behind climate action groups, researchers, and progressive policymakers to keep pressure on the government, to not bow down to oil companies, but put first the flourishing of planet and people.
See you on the streets!