The UK already doesn't subsidise fossil fuels

We will, as sure as eggs is eggs, have someone popping up to shriek that Britain must stop subsidising fossil fuel consumption:

Global fossil fuel subsidies almost doubled in 2021, analysis finds

Support amid huge industry profits is a ‘roadblock’ to tackling climate crisis, says International Energy Agency

It is, quite obviously, an odd thing to do, subsidise fossil fuel usage if you’re trying to reduce fossil fuel usage. So, we shouldn’t be doing that, equally obviously.

Global public subsidies for fossil fuels almost doubled to $700bn in 2021, analysis has shown, representing a “roadblock” to tackling the climate crisis.

Despite the huge profits of fossil fuel companies, the subsidies soared as governments sought to shield citizens from surging energy prices as the global economy rebounded from the Covid-19 pandemic.

Most of the subsidies were used to reduce the price paid by consumers.

It’s that last sentence which is important here.

We’ve had, as a major theme here for many years, an insistence that how you count what you count matters. Further, to understand what is being counted you’ve got to delve into the details - otherwise you’ll be making all sorts of idiot errors.

There are two - both arguable in themselves, but very different - ways of counting fossil fuel subsidies. One is the one that gives us that $6 trillion number sometimes bandied about. That is totted up by deciding what should be the correct level of taxation to start with. So, the externalities of fossil fuel use - CO2 emissions, particularate emissions, congestion, accidents, the kitchen sink - and claim as a subsidy any price that doesn’t include all of those. Britain, amazingly, does charge near exactly the right amount for all of those on regular petrol and diesel. Further, if there’s a VAT then energy must pay the full whack of VAT. This makes the 5% domestic energy rate a subsidy in this sense.

Well, OK, it’s arguable but that’s what the measure is.

Then there’s this method of counting here, which gives us this $700 billion. That’s direct subsidies to consumption. Not variances from some theoretically pure system of taxation but actual cash handed out to make energy cheaper for consumers (whether domestic or industrial). Britain does not do any of that.

We can track that from the press release, the website, the database and then the country report.

So, we’re going to have the usual talking heads popping up to insist that this $700 billion number proves that Britain must stop subsidising fossil fuels. By their comments ye shall know them - those saying such will be ignorant. Because by this measure, this $700 billion, Britain already does not subsidise fossil fuels. We’ve already stopped doing it.

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