Fossil Fuel Subsidies Must End – Investor Group tells G20

by John Brian Shannon

In advance of the G20 Hamburg Summit in July 2017 investor groups that control $2.8 trillion in assets report that fossil fuel subsidies are counterproductive to G20 economies.

This latest call to remove fossil fuel subsidies came two years after the G20 Brisbane Summit where leaders announced their intention to, “reaffirm our commitment to rationalise and phase out inefficient fossil fuel subsidies that encourage wasteful consumption.”G20 Brisbane Leaders’ Communiqué (November 2014, Item #18)

The 16-member mega-investor group says G20 nations should set a clear timeline “for the full and equitable phase-out by all G20 members of all fossil fuel subsidies by 2020,” and mobilize “to accelerate green investment and reduce climate risk” in a report submitted to G20 foreign ministers preparing for the upcoming G20 Summit in Hamburg, Germany.

G20 fossil fuel subsidies total $452 billion a year according to the Overseas Development Institute and Oil Change International.

A Must Read: Empty promises:
G20 subsidies to oil, gas and coal production

Fossil Fuel Subsidies chart from Empty Promises - G20 subsidies to oil, gas and coal production. Image courtesy of ODI and Oil Change International
Annual G20 Fossil Fuel Subsidies (2015)

Meanwhile, annual subsidies for renewable energy in the G20 nations amounts to only 1/4 of the annual subsidy awarded to fossil fuels, which have received mega-billions of subsidy dollars every single year since 1918.

G20 Fossil Fuel Subsidies total 452 billion globally 2015, while Renewable Energy Subsidies total 121 billion globally 2015
Annual G20 Fossil Fuel Subsidies = $452 billion. Renewable Energy Subsidies = $121 billion (2015)

For the next few paragraphs, let’s look at the United States exclusively…

Fossil Fuel Subsidies - Energy subsidies from 1918-2009. Image courtesy of Nancy Pfund
1918-2009 Fossil Fuel Subsidies vs. Renewable Energy Subsidies in the U.S. The Historical Role of Federal Subsidies in Shaping America’s Energy Future: What Would Jefferson Do?

The average annual subsidy for Oil and Gas alone in the U.S. from 1918-2009 totals $4.86 billion.

Adding all those (oil and gas only) subsidy years together gets you the astonishing figure of $442,260,000,000. in total from 1918-2009 — that’s half a trillion dollars right there, folks.

Which doesn’t include wars to protect foreign oil exporters to the United States.

Nor does it include so-called ‘externalities’ which are the negative costs associated with the burning of oil and gas — such as the 200,000 annual premature deaths in the U.S. caused by airborne pollution, along with the other healthcare costs associated with air pollution, the environmental costs to farmers and to the aquatic life in our rivers and marine zones, and higher infrastructure (maintenance) costs.

Fossil Fuel Subsidies chart from DBL Investors What Would Jefferson Do. Total Capital Gains tax allowance coal subsidy 1.3 trillion 2000-2009
Fossil Fuel Subsidies chart from DBL Investors What Would Jefferson Do? which shows the capital gains allowance (a type of subsidy) enjoyed by the U.S. coal industry that totals $1.3 billion over the 2000-2009 timeframe.

This chart shows only the U.S. capital gains allowance! There are other coal subsidies, direct and indirect, at play in America — in addition to the externality costs of coal.

On the Externality Cost of Coal
Harvard Medicine

Each stage in the life cycle of coal—extraction, transport, processing, and combustion—generates a waste stream and carries multiple hazards for health and the environment. These costs are external to the coal industry and are thus often considered “externalities.”

We estimate that the life cycle effects of coal and the waste stream generated are costing the U.S. public… over half a trillion dollars annually.

Many of these so-called externalities are, moreover, cumulative.

Accounting for the damages conservatively doubles to triples the price of electricity from coal per kWh generated, making wind, solar, and other forms of non-fossil fuel power generation, along with investments in efficiency and electricity conservation methods, economically competitive. — Full Cost Accounting for the Life Cycle of Coal (Harvard Medicine)

Fossil Fuels = High Subsidy Costs, High Externality Costs and Lower Employment: When Compared to Renewable Energy

In addition to the direct and indirect subsidy costs of fossil fuels, there are the externality costs associated with carbon fuels, but almost more important, is the ‘lost opportunity cost’ of the carbon economy.

Over many decades in the U.S., conventional energy producers have tapered their labour costs to only a few persons per barrel of oil equivalent (BOE) while renewable energy hires more workers per BOE, which will result in a significant net gain for the U.S. economy.

Infographic: More Workers In Solar Than Fossil Fuel Power Generation | Statista You will find more statistics at Statista

Even with the paltry subsidy regimes presently in place for U.S. renewable energy in the year 2017 — once fossil fuel subsidy costs, the externality costs of fossil fuels, and the ‘missed opportunity’ costs (fewer jobs per BOE) are factored-in to the equation, renewable energy really begins to shine.

And best of all — by 2020 and without any subsidies (yes, really!) renewable energy will regularly beat highly subsidized conventional energy generators at their own game — by lowering electricity costs, by lowering healthcare and infrastructure costs, and by creating thousands of new, good-paying jobs.

Who was saying that renewable energy was a pipe-dream?

The Difference between Biofuels and Fossil Fuels

Originally published at
by John Brian Shannon John Brian Shannon

The burning of fossil fuels over the past 90 years has released gigatonnes of CO2 into the atmosphere over that time.

Previous to the large-scale commercial extraction of petroleum beginning around 1920, the carbon embedded within coal and oil was permanentl­y stored undergroun­d and had stayed there since the time of the dinosaurs.

It wasn’t going anywhere near the surface of our planet or into our atmosphere anytime in the next billion years — until mankind started bringing it up to the surface and burning it

The burning of fossil fuels extracted from deep below the surface of the Earth is a huge source of new CO2 introduced into our present-day atmosphere. — John Brian Shannon, Biofuel Central

Plant-based biofuels on the other hand, utilize plant matter that grows in our 21st-century — plants which absorb CO2 out of our modern-day atmosphere every day of the year­

Jatropha tree
Jatropha fruit is toxic, but it has high oil content and it grows in semi-arid regions making it suitable for biofuels. In developing nations, jatropha plantations provide plenty of work for labourers around harvest time.

Jatropha trees, for instance, live 40 years. Only the plentiful fruits (several tonnes per hectare) are harvested each year for processing into biofuels while the rest of the tree continues to draw CO2 out of the air every day of the year. Because that’s what trees do.

After breathing in CO2 and exhaling oxygen for 40 years, at the end of that tree’s life almost exactly the amount of CO2 it captured during its lifetime returns to the environmen­t, making the Jatropha’s carbon footprint, zero. (Exactly what it captured, it released, over its 40 year lifetime)

Then, new Jatropha trees are grown and a new carbon-neutral process begins.

Not so for fossil fuels. Carbon-heavy coal and oil are a huge source of new carbon that we bring up from deep undergroun­d which, as we burn it, continuously adds new CO2 to our atmosphere

Therefore ALL fossil fuel burning adds to the overall CO2 load of our atmosphere – while plant based biofuels are CO2-neutral, as they merely recycle the same carbon dioxide, many times over.

Where am I going with this?

We should blend our fossil fuels with CO2-neutral biofuels (50/50) to taper our dinosaur era, petroleum based, CO2-additions to the atmosphere.

Biofuels now come in three generations

  • 1st generation biofuels were the first on the market, but required massive subsidies to be economically viable.
  • 2nd generation biofuels were next-up and as the technical problems are now solved, new 2nd generation biofuels are surging ahead and show dramatic CO2 reductions.
  • 3rd generation biofuels are in the pilot programme stage at this point, but early indications are that negative CO2 emissions may be possible — as megatonnes of waste carbon dioxide from nearby factories are used in algae biofuels production and the profitability of this new generation of biofuels (even without subsidies) seems likely.

The three generations of biofuels

Corn, palm tree, and sugar-cane are examples of 1st generation biofuel crops. They are poor choices for biofuel production as they have their own environmental negatives attached to them and they require massive subsidies to compete in the marketplace.

1st generation biofuel crops require billions of gallons of precious water, plenty of fertilizer, pesticides and land management.

And it goes without saying of course, that replacing food crops with biofuel crops is a very bad idea.

Fortunately, 2nd generation biofuel plants grow in conditions and areas which are inhospitable for food crops.

Some examples of 2nd generation biofuel plants which grow in semi-arid regions are; Jatropha, Millettia and Camelina and the cultivation of these provide plenty of jobs for developing nation labourers.

“China has set aside an area the size of England in which to grow 2nd generation biofuel crops.” — Will Thurmond, Biodiesel 2020

Biofuels that are produced with algae or enzymes are known as 3rd generation biofuels and are the most efficient way of producing biofuels, using only water, plant matter, relatively small amounts of algae and microscopic enzymes to do the work.

And talk about good karma, algae thrive when CO2 is added to the conversion chamber (called a ‘biofuel reactor’ which is basically a 500,000 gallon soup pot) and helps to convert the ingredients into high quality gasoline.

In the new algae-to-gasoline plants, tonnes of CO2 from nearby industry are added to the ingredient list to help boost the speed of the process and to increase the final amount of gasoline produced.

Like any other green plant, algae ‘eats’ the CO2 and emits pure oxygen just like the trees in your neighborhood.

Each batch takes 5 days and at continuous production that means CO2-eating and oxygen production is happening every day of the year.

Green gasoline inside clear plastic pipes. Algae requires four days of sunlight and mild temperatures to process the ingredient mix into pure gasoline. Wageningen University Integrated Sustainable Algae (InteSusAl) demonstration pilot project in the municipality of Olhão, in the Algarve region of southern Portugal. Image courtesy of AlgaePARC (Algae Production and Research Centre) at Wageningen University & Research Centre.

It’s better to continuously recycle a large amount of carbon-neutral plant-based CO2 (recycling it millions of times over) than to bring new carbon in the form of coal and oil to the Earth’s surface with it’s carbon-heavy load to burn it, thereby adding unfathomable gigatonnes of new CO2 to our 21st century atmosphere.

Yet another biofuel bonus

Boeing 787. Image courtesy of Boeing.
Boeing 787. Image courtesy of Boeing.

Lower CO2 emissions are a well-known bio-jet fuel benefit, regardless of which biofuel generation they hail from.

Boeing’s Sustainable Biofuels Research & Technology Program reported 80% lower CO2 emissions for camelina bio-jet fuel when compared to conventional jet fuel.

All 1st, 2nd, and 3rd generation biofuels are low carbon fuels (at the combustion stage) but only 2nd generation biofuels are economically viable at this point in time. New formulation 3rd generation biofuels look to have even lower CO2 emissions than the 2nd generation biofuels already on the market.

Depending on the type of biofuel crop employed, lowered CO2 emissions (as compared to conventional petroleum-based jet fuels) in the range of 50-80% are proven

New algae bio-jet fuels are showing CO2 emission reductions of better than 90% when compared to petroleum-based jet fuel.

There is every hope that within 10 years that new algae bio-jet fuel will prove to be CO2-negative as the algae requires huge volumes of carbon dioxide gas to grow at best possible speed.

Airline operators and the U.S. military note that the new bio-jet fuels extend engine life, emit less soot and smoke, and are easier on fuel system components such as fuel pumps and injectors

Notes about sugarcane:
Sugarcane moves from its present 1st generation biofuel ranking
to 2nd generation biofuel ranking if certain guidelines are followed.

Sugarcane is usually considered a 1st generation biofuel crop, but;

1) if farmers refrain from burning sugarcane fields after each harvest (twice yearly) and
2) if the rest of the plant (not just the ‘cane’ but also the roots and leaves) are converted to biofuels via a new type of cellulosic bioreactor, and
3) where sugarcane fields aren’t displacing food crops, sugarcane is an excellent choice for a high-yield 2nd generation biofuel.

G20 Brisbane 2014 Hints at Eliminating Fossil Fuel Subsidies


As the G20 Brisbane 2014 wraps up, leaders discussed the eventual elimination of the massive global subsidies paid to the fossil fuel industry which topped some $600 billion dollars last year, slightly more than last year’s $550 billion and 2012′s $500 billion.

Meanwhile, non-polluting renewable energy continues to receive peanuts — well under $100 billion dollars worldwide in 2014.

At the G20 Brisbane 2014 Summit leaders discussed elimination of the massive $600 billion dollars subsidy paid to the fossil fuel industry in 2014.
At the G20 Brisbane 2014 Summit leaders discussed elimination of the massive $600 billion dollars subsidy paid to the fossil fuel industry in 2014.

Clean energy does have it’s detractors, similar to the criticisms by the detractors of aircraft travel 100 years ago when people traveled by ship or by train. But, “The times, they are a changin’,” rings true in this century too!

“We do it this way, because we’ve always done it this way,” is no longer good enough. The fossil fuel industry provides the fuel for the world’s transportation industry and it is the most heavily subsidized industry on the planet and has been given carte blanche to operate in any way it sees fit.

Fine. We needed the oil. Whatever has taken place was done with our tacit approval. But with the very real effects of climate change now becoming clearer to us with each passing year, not to mention the more poignant effects on human health by breathing polluted air and drinking fracked water, fossil now requires a relook.

It’s not just climate and individual health concerns that are driving the discussion, health care systems around the world are now realizing that a good portion of disease and mortality are directly relatable to the environment. In major industrialized nations, billions of dollars in health care dollars are spent to repair the damage to people’s health from fossil fuel emissions. It’s not a few billion ‘here and there’ it may be as high as 1/3rd of all health care spending in the world’s most industrialized nations.

The cost of fossil is becoming a very large number for even the richest countries

  • Climate: For each 1 degree of climate increase the world will spend 1 trillion dollars to counter drought, sea level rise, abnormal storm activity and land remediation.
  • Health: Our sophisticated health care systems can now argue with statistical proof that fossil fuel burning contributes to human mortality and disease in a much more precise manner than in decades past.
  • Costs: $600 billion dollars in subsides is a lot for the world’s nations to bear. And that number continues to grow each year as all of the ‘easy oil’ and ‘easy gas’ is already tapped and locations with special extraction methods must be employed.

From the G20 Energy Sustainability Working Group 2014, Co-chair’s Report

Inefficient fossil fuel subsidies

G20 members reported to G20 finance ministers in September on their progress towards meeting the G20 commitment, initially made at the 2009 Pittsburgh summit and reaffirmed at subsequent summits, to “ rationalize and phase out inefficient fossil fuel subsidies that encourage wasteful consumption over the medium term ”. The ESWG benefitted from updates on the preparations for the first round of voluntary peer reviews involving the United States and China. A second round of voluntary peer reviews involving other G20 countries is expected to commence in mid – 2015. Germany has announced it will participate in the second round.

In response to a request from leaders at the 2013 Saint Petersburg summit, the ESWG tasked the World Bank Group, in consultation with other relevant international organisations, to prepare a report on transitional policies to assist the poor while phasing out inefficient fossil fuel subsidies that encourage wasteful consumption. The World Bank Group provided regular updates to the ESWG through the year and the final report was delivered to finance ministers in September. — Read the full report here.

It looks like ‘business as usual’ is headed for change in the energy industry

Only fossil fuel superpowers Australia (coal), Canada (coal, oil, tar-sands petroleum, fracked gas and conventional gas, deepsea oil extraction), and Saudi Arabia (oil), alone out of the G20 did not see fit to endorse the Energy Sustainability Working Group 2014 report.

No surprise there. However, the day is coming when the costs of not switching to clean energy will far exceed the costs of switching. If all energy subsidies were magically and instantly removed — that day would be today.