International Energy Agency data shows that worldwide subsidies that lower consumer costs for fossil fuels grew to over $400 billion last year, their highest levels since 2014.
Why it matters: The persistence of the payments, despite some progress in pricing reforms in recent years in several nations, are among the many headwinds in the effort to combat climate change.
- And the IEA report doesn't even include various governments' support for fossil fuel production projects.
What they're saying: "The continued prevalence of these subsidies — more than double the estimated subsidies to renewables — greatly complicates the task of achieving an early peak in global emissions," IEA analysts said in a June 13 report.
Where it stands: Higher oil prices in 2018 than 2017 were one driver of the overall increase, while higher energy consumption was another.
- Oil-related subsidies rose from $143 billion in 2017 to $182 billion last year.
- Higher petro prices were a strain in countries where consumers faced higher retail costs, "particularly where national currencies were losing value against the U.S. dollar," IEA notes.
- Indonesia, Iran, Egypt and Venezuela saw the biggest subsidy increases for oil products. Iran, Venezuela, Mexico, Egypt and China all saw higher subsidies for fossil-based power.
The intrigue: Tackling subsidies is tricky — as IEA notes, there's a need to make energy more affordable to poor and vulnerable populations.
- "But many subsidies are poorly targeted, disproportionally benefiting wealthier segments of the population that use much more of the subsidised fuel," the report states.