
Richest nations fail to agree on deadline to phase out fossil fuel subsidies - ramonvillasante
https://www.washingtonpost.com/world/richest-nations-fail-to-agree-on-deadline-to-phase-out-fossil-fuel-subsidies/2016/07/01/7db563fb-42f0-46c8-bea4-2fcfc0f48c69_story.html
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Lazare
The headline is very misleading.

1\. This was a meeting of the G20; it's LARGE nations, not RICH nations.

2\. Poor nations are responsible for the overwhelming majority of fossil fuel
subsidies. The worst offenders are China, Russia, Saudi Arabia, Brazil, and
Mexico. Someone else noted that Saudi Arabia was a major blocker of an
agreement to cut subsidies, and someone asked why "we" (ie, the US/Europe)
don't just ignore them and go ahead and cut subsidies ourselves. The answer is
because Saudi Arabia is the one doing the subsidising; only they can cut their
own subsidies.

3\. What subsidies rich countries do provide tend to be highly contentious,
and depending on how you measure them are either small or non-existent. A poor
country might sell petrol and heating oil for a fraction of its cost of
production, which is an obvious subsidy to the oil and gas industry. For, eg,
the US, most if its "subsidy" is stuff like IRS rules that say that a
petroleum company can count most of a fine for an oil spill as a business
expense. Should a fine be classified as a business expense? If you think it
shouldn't be, the fact that the IRS (partially) disagrees represents a small
subsidy. Then again, a lot of fines do get counted as expenses, and the US is
hardly alone in having rules like that. Similarly, a lot of coal is mined in
the Powder Basin Region, which is not designated as a coal producing region.
Under US law, land in coal producing regions is subject to slightly higher
leases than land outside them, which means the coal companies who lease land
in the Powder Basin are paying slightly less than they "should" be paying. Or
alternatively, coal companies who lease land in other coal regions are paying
slightly more. Or maybe coal companies should pay whatever the law specifies;
it's not like there's any global standard on what the right cost should for
leasing coal reserves. But if you think that the US has magically set the
perfect price for coal producing regions, AND that the Powder Basin Region
should totally be designated a coal producing region, then sure, that's a
small subsidy for the companies who lease land in the Powder Basin. And so on.

In short, better headline: Poor oil producers say "no thanks" to suggestions
from rich countries that they should cut their subsidies for domestic
consumption.

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tomp
> Saudi Arabia has been the major blocker of a deal at the G-20

Well, who would have thought... But seriously, why do we (or rather, G-19)
even listen to them? Why can't we just cut the subsidies ourselves, have
investments in renewables grow and watch SA slowly drown it its oil?

~~~
dangrossman
Warning, my layman's understanding:

The United States maintains global hegemony, props up the value of its
currency, and reduces the cost of imports for its citizens, in some
significant part due to the "petrodollar". That's the agreements the US formed
with oil producing nations like Saudi Arabia to only sell oil denominated in
US dollars.

Forcing all oil trade be done in USD requires nearly every nation carry large
USD reserves, increasing demand for and the strength of the US dollar,
increasing the currency's stability, and increasing other nations' reliance on
relations with the US.

A weaker Saudi Arabia, and a weaker oil market, is also a weaker US dollar,
and weaker US power internationally. This pits environmental concerns against
economic and political ones at a very high level. While the subsidies may be
small enough that they're eventually dropped, this is my understanding of why
the US maintains such close ties to S.A. even when our goals are not otherwise
aligned.

~~~
enugu
Here's a good counterargument against reserve currency status as a positive
thing and listing the negative effects. [http://blog.mpettis.com/2016/05/the-
titillating-and-terrifyi...](http://blog.mpettis.com/2016/05/the-titillating-
and-terrifying-collapse-of-the-dollar-again/). It's a long article, start from
'The effects of reserve currency status'

The positive effects like seignorage are outweighed by other effects. Japan
discouraged an attempt by China to hold the yen. Similarly Europe and China
have opposed purchase by foreign central banks.

> It turns out that foreign investment is only good for an economy if it
> brings needed technological or managerial innovation, or if the recipient
> country has productive investment needs that cannot otherwise be funded. If
> neither of these two conditions hold, foreign investment must always lead
> either to a higher debt burden or to higher unemployment. Put differently,
> foreign investment must result in some combination of only three things:
> higher productive investment, a higher debt burden, or higher unemployment,
> and if it does not cause a rise in productive investment, it must cause one
> of the other two.

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ramonvillasante
It’s too big markets and subsidies

"Citing data from the International Monetary Fund (IMF), Musk lamented he’s
“competing against something that has a $6 trillion per year subsidy,” and
that the low gas prices that subsidies create are “weakening the economic-
forcing function to sustainable transport and clean energy in general.”
Source: [http://ecowatch.com/2016/05/05/elon-musk-fossil-
fuels/](http://ecowatch.com/2016/05/05/elon-musk-fossil-fuels/)

At the global scale we have a big mistake since decades. Fixing it is going to
be the most difficult challenge ever to date. But I’m optimistic in the
accelerated speed of change in tech-science, market, prices, policies and
social awareness even with the fact the we are now far from the right path to
achieve it.

We need a very holistic transtion to save people and planet from climate
change and pollution dramatic impacts. Including re educating society towards
sustainability. This includes helping to transform skills of people and
professionals from traditional unsustainable industries and societies to
sustainable ones. This requires action from private, public and nonprofit
sectors and people, to cope with the speed of the change needed according to
majoritarian scientific consensus.

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marcusgarvey
>A promise to cut subsidies was first made at a G-20 meeting in Pittsburgh in
2009, but since then very little progress has been made

So seven years and counting.

>[U.S. Secretary of Energy] Moniz said the United States would eventually need
legislative action in Congress to reach longer-term emissions goals, but he
said that he believed public pressure for Congress to act would mount as sea
levels rise and “Mother Nature’s voice” continues to get louder.

Translation: Nothing will be done until things take an unambiguously
disastrous turn -- if then. How reassuring.

~~~
adrenalinelol
Any country that is facing economic stagnation (most of the developed world)
is going to be hard pressed to inflict short-term pain for long-term gain.

~~~
marcusgarvey
I can think of at least two scenarios where that doesn't quite hold: in times
of war and also in times when austerity-espousing politicians "have" to make
budget cuts and focus those cuts on social welfare programs. Then comes all
the flowery language in support of "shared sacrifice" for the greater good.
Then, they are usually able to make very persuasive arguments for inflicting
short-term pain. One would think these same politicians could use their
rhetorical power to help avoid cataclysmic climate change.

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toomuchtodo
What can be done to apply pressure on these countries to speed up the phase
out of fossil fuel subsidies? Replace representatives in their respective
legislative branches?

~~~
honkhonkpants
Tariffs are good. It is how countries force other countries to compete equally
on labor rights, environmental regulations and all that. If the other country
doesn't have those things you just tariff their goods until you've priced in
the local moral standards into those imports.

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afarrell
Given the belief that we need to leave fossil fuels in the ground and close
mining operations, shouldn't that change the left's opinion of Margret
Thatcher? (Or at least of the mine closures)

~~~
adrenalinelol
She was also a champion of financial de-regulation which culminated in the
crash of 2008 which large swathes of the population have yet to recover from
(underemployment, retirement-funds, etc...).

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roflchoppa
It's going to be interesting to see the effects on manufacturing, esp with the
bits and pieces of things that are made with oil.

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Pica_soO
Free market willz it!

