Fossil subsidies stifle renewable energy

Publish date: August 23, 2010

STAVANGER, Norway – Peter Wooders, an international expert on subsidies, criticized the Norwegian government’s heavy subsidy of the oil industry – and received full support of Bellona's vice president, Marius Holm.

“A reform of the oil subsidies will contribute to making renewable energy more competitive,” said Wooders, who is a senior economist at the Global Subsidies Initiative (GSI), at Monday’s Bellona seminar in Stavanger.

International survey

In connection with the ONS oil conference being held in this city, Bellona held true to tradition, a separate seminar the day before the official opening of the oil industry get together.

Wooders’ GSI has set itself the goal of mapping the state petroleum subsidies worldwide. GSI is part of the International Institute for Sustainable Development, and aims to examine and promote the reform of subsidies that have negative economic, social or environmental consequences.

Woods defined subsidies in this context as preferential treatment of a company, an industry or sector wherein public funds are given for private purposes. 

Economic efficiency

Wooders’ main message is that a removal of subsidies will mean a freer economy for any state.  “The countries save money by eliminating subsidies, money that can better be utilized for national priorities – such as health, education and so on,” said Wooders.

GSI has calculated that if all subsidies to energy consumers are removed, a mean of between five and ten percent in reduction of CO2  emissions worldwide could be achieved. In addition, such a removal of subsidies could lead to a more competitive renewable energy sector.

Huge subsidies in Norway

That is a message that Bellona’s vice-president Holm, agrees with.

“Norwegian oil subsidies are enormous. For 2009 they are running up to NOK 9 billion (or €1.1 billion, according to the Norwegian Oil Tax Office), which is almost five times what the state offers in support of energy efficiency and renewable energy. In addition to this, the oil sector benefits from large tax deductions and exploration write-offs, which favour oil investments, “said Holm.

“To maintain oil subsidies is to pour oil on fire,” said Wooders in his address to the Bellona gathering. “Then we bind much of our economy with oil use at a time when we must step down in oil production,” Wooders underscores.

Wooders concluded with his own variation of the ONS slogan “Energy for more people”:

“Lower energy subsidies means safer and less climate change for more people,” said Wooders.

Subscribe to our newsletter

Get our latest news

Stay informed