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IEA Calls for Clean Energy Investment as Subsidies Surge

Major economies’ support for the production and consumption of coal, oil and natural gas saw a sharp increase in 2021, according to research by the Organisation for Economic Co-operation and Development (OECD) and the International Energy Agency (IEA). Analysis by the OECD of budgetary transfers and tax breaks linked to the production of coal, oil and gas across G20 economies highlighted that fossil fuel support rose to an almost 50% year-on-year increase of US$190 billion in 2021, from US$147 billion in 2020. The IEA also analysed fossil fuel subsidies, noting that – across 42 economies – consumer support tripled between 2020 to 2021, reaching US$531 billion. The IEA and OECD have both estimated that consumption subsidies will rise even further in 2022 in response to the energy crisis. Overall government support for fossil fuels across 51 assessed countries reached US$697.2 billion last year, compared to US$352.4 in 2020, the report noted, calling for governments to phase-out fossil fuel subsidies and channel investment into the clean energy transition. Faith Birol, the IEA’s Executive Director, said: “Fossil fuel subsidies are a roadblock to a more sustainable future, but the difficulty that governments face in removing them is underscored at times of high and volatile fuel prices. A surge in investment in clean energy technologies and infrastructure is the only lasting solution to today’s global energy crisis and the best way to reduce the exposure of consumers to high fuel costs.” 

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