Subsidies are not justified
In March 2023, Saudi Aramco reported a record $161bn (£134bn) profit for 2022, the largest ever annual profit made by an oil and gas company.
Over the same period, the five largest Western oil and gas companies (ExxonMobil, BP, Shell, Chevron and TotalEnergies) made a combined annual profit of $195bn (£163bn).
That’s $356bn (£297bn) in profits made by just six fossil fuel companies.
Given these huge profits, one wonders why fossil fuel companies received over $1 trillion in direct subsidies last year, in the form of tax breaks and direct payments from governments around the world.
The effect of these subsidies is to keep fossil fuels artificially competitive against other forms of energy.
It gets worse. According to the International Monetary Fund (IMF), if you also add the indirect subsidies to reflect the true cost of fossil fuels, such as air pollution and the impact on our warming climate, then the total subsidies rise to over $6 trillion.
Despite their apparent commitment to net zero, the capital expenditure for the exploration and development of new oil and gas fields is expected to total $4.2 trillion between 2020 and 2030.
That’s enough to cover the entire investment gap for renewables by 2030.
It should be clear from these huge sums that far from net zero being unaffordable, we cannot afford not to achieve net zero.
The IMF has calculated that if governments removed these subsidies, this would reduce emissions to the level needed by 2030 to keep us on track to limiting global warming to 1.5°C.
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Attempts to incentivise solar on rooftops have delivered very little and failed.