By Paul Homewood
Part II from the Telegraph’s woeful weekend!
It is written by Maurice Tulloch, who is chief executive of international insurance at Aviva:
The insurance industry exists to manage risk; as far as possible we aim to prevent or minimise the impact of losses before they happen. Burning fossil fuels gives rise to short, medium and long-term risks for insurers, investors, and our customers and society alike. And yet governments continue to promote the production of oil, gas and coal with subsidies.
The OECD estimates that $160bn to $200bn (£123bn to £154bn) a year goes towards supporting fossil fuel production and consumption in OECD countries and key emerging economies. This actively contributes to air pollution, health problems and premature deaths, as well as the increase in extreme weather events that comes with climate change. This policy costs taxpayers twice – firstly for the subsidies, and then again as public funds are needed to deal with health costs and climate change.
Just recently, the Health and Environment Alliance launched a report that laid out the costs of the health impacts that come from fossil fuel subsidies. In the UK, health costs arising from fossil fuel driven air pollution are almost five times higher than the subsidies paid. Over $6bn of public money is spent on the industry, and the health costs from premature deaths linked to air pollution run to over $30bn.
Globally, it is estimated that every year there are 6.5 million deaths from respiratory infections, strokes, heart attacks, lung cancer and chronic lung disease that are directly attributable to the combustion of fossil fuels. Besides the immediate public health impacts of bad air, the broader effects of climate change come with real costs.
A recent report by the Lancet Commission on Health and Climate Change made a compelling case that global morbidity and mortality rates are intimately linked to climate change.
Warmer temperatures create water scarcity and food insecurity in certain regions, resulting in malnutrition and even starvation. Deadly heatwaves have become a threat to one third of the world’s population. Viral pandemics are being exacerbated by warmer temperatures, as mosquito-born diseases like Zika and dengue fever thrive in a hotter, wetter world.
Ending subsidies to fossil fuels would produce a broad win for society
These combined impacts are taxing public health systems and private insurers alike, on top of the costs of property damage and loss brought about by sea level rises and storm surges, flooding, and other extreme weather events. Yet world leaders continue to underwrite one of the contributing causes.
The report argues that ending subsidies to fossil fuels would produce a rare quadruple win for society. First, national budgets could grow and deficits shrink with increased revenue from taxes currently unpaid by oil, gas and coal companies, generally delivered in the form of tax breaks and concessions.
Second, those budgets could go further with less to spend on the healthcare costs associated with local air pollution. Third, the current and eventual costs of reacting to and adapting for the impacts of climate change would be reduced.
Finally, the public would be healthier and more productive in the workforce, providing even more of an economic boost.
None of this is straightforward. There are people who rely on subsidised fuel. Any transition needs to be managed carefully to mitigate any social impacts and to ensure continuity of energy supply. And we must recognise the knotty issue of carbon entanglement, where governments and asset owners may be vested in the status quo.
The fact remains that having a price that reflects the true cost of the fuel would enable these discussions to happen with more transparency.
The G7 have, in fact, already promised to end fossil fuel subsidies by 2025. We should congratulate Canada, for example, for announcing moves to end its own subsidies in its recent budget. Italy, which next chairs the G20, has published a subsidy inventory.
These are steps in the right direction. They won’t solve the problem of climate change alone, and more countries need to get involved. But the fact remains that subsidies are ultimately unsustainable.
It is hard to know where to start with this pile of garbage. As usual though, the commenters talk a lot more sense!
The OECD estimates that $160bn to $200bn (£123bn to £154bn) a year goes towards supporting fossil fuel production and consumption in OECD countries and key emerging economies.
What other countries do is purely up to them, and has nothing to do with us. Many of these subsidies go to consumption, as cheap affordable energy is important for people all around the world. Such subsidies have nothing to do with subsidising fossil fuels as such.
Is Tulloch really suggesting that people be forced to pay more for energy, presumably as a way of reducing their consumption. Is he suggesting that they be forced to rely on even more expensive renewable energy?
This actively contributes to air pollution, health problems and premature deaths, as well as the increase in extreme weather events that comes with climate change.
Most such health problems around the world arise not from fossil fuels, but from burning wood and dung.
There is little real world evidence to support the notion that clean power plants and transport are having the effects implied.
There is also no evidence either that extreme weather events are increasing, as even the IPCC is forced to admit.
Just recently, the Health and Environment Alliance launched a report that laid out the costs of the health impacts that come from fossil fuel subsidies. In the UK, health costs arising from fossil fuel driven air pollution are almost five times higher than the subsidies paid. Over $6bn of public money is spent on the industry, and the health costs from premature deaths linked to air pollution run to over $30bn.
The Health and Environment Alliance is yet another green lobby group, and is funded by the EU. They clearly are not a reliable source.
They claim that $6bn is spent “on the industry” in the UK. As we will see, this is nonsense, as there are no such subsidies at all.
Globally, it is estimated that every year there are 6.5 million deaths from respiratory infections, strokes, heart attacks, lung cancer and chronic lung disease that are directly attributable to the combustion of fossil fuels.
It may be estimated, but there is no evidence whatsoever to back up this claim.
A recent report by the Lancet Commission on Health and Climate Change made a compelling case that global morbidity and mortality rates are intimately linked to climate change.
Warmer temperatures create water scarcity and food insecurity in certain regions, resulting in malnutrition and even starvation. Deadly heatwaves have become a threat to one third of the world’s population. Viral pandemics are being exacerbated by warmer temperatures, as mosquito-born diseases like Zika and dengue fever thrive in a hotter, wetter world.
Another report that has been utterly debunked. Global food production has been growing steadily for years. There have always been local famines, and always will be – there is zero evidence that these have anything to do with the little bit of warming seen in recent years.
Regardless of what the climate is doing, it is modern technology, equipment and fertilisers (all courtesy of fossil fuels) which have improved food output and generally raised living standards across the world, to a degree that could not have been envisioned a few decades ago.
Does Tulloch propose that we cut back on fossil fuels and return to those earlier times?
He also claims that there will be water scarcity in a wetter world! As for those viral pandemics, scientists who study these things would say he was talking through his hat.
The report argues that ending subsidies to fossil fuels would produce a rare quadruple win for society. First, national budgets could grow and deficits shrink with increased revenue from taxes currently unpaid by oil, gas and coal companies, generally delivered in the form of tax breaks and concessions.
Notice the last sentence, generally delivered in the form of tax breaks and concessions.
In other words, fossil fuel companies are not on the whole subsidised, they actually pay tax. Talk of tax breaks is a deliberate ploy to draw readers’ attention away from this fact.
In the UK, for instance, all companies pay Corporation Tax, based on the profit they make. The profit is, of course, calculated by deducting expenses from revenue. There are various rules, applying to all companies, as to which costs are allowable for deduction, and whether they can be deducted up front or over a period of time.
There is nothing unique about any of this as far as oil, gas and coal companies are concerned. And they most certainly are not subsidies, or even tax foregone. But don’t take my word for it; the UK Government, the EU and the IEA all say the same:
Naturally, for an industry like North Sea oil, with its high upfront development costs, back end decommissioning and long life cycle, there needs to be some industry specific rules and a certain amount of flexibility. (The pharmaceutical industry is a similar case).
But in overall terms, since the start, North Sea oil producers have consistently paid more tax than other companies, via extra taxes such as royalties, supplementary charges and petroleum revenue tax.
In addition to this, motorists pay nearly £30bn a year extra in vehicle duty.
Tulloch is clear that he wants to reduce fossil fuel usage. Yet if he gets his way, it will put at risk billions of tax revenue. Perhaps he would care to explain how he plans to make up for this shortfall.
The Telegraph seems to be making a habit of offering space to all sorts of renewable lobbyists, allowing them to print highly biased and often woefully inaccurate columns.
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August 14, 2017 at 08:09AM
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