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Calls for government to end fossil fuel subsidies

  • April 27 2021
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Calls for government to end fossil fuel subsidies

By Cameron Micallef
April 27 2021

Subsidies to the fossil fuel industry cost the federal, state and territory budgets over $10 billion a year despite calls for Australia to do more on climate change, a new report has revealed.

end fossil fuel subsidies

Calls for government to end fossil fuel subsidies

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  • April 27 2021
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Subsidies to the fossil fuel industry cost the federal, state and territory budgets over $10 billion a year despite calls for Australia to do more on climate change, a new report has revealed.

end fossil fuel subsidies

A report released by The Australian Institute showed that the government is giving $10.3 billion in subsidies to the coal, oil and gas industry in 2020, with taxpayers effectively paying $19,686 every minute of every day to the fossil fuel industry. 

The progressive think tank said the $7.84 billion allocated for the fuel tax credit scheme in the federal budget alone exceeds the $7.82 billion spent on Army capabilities or the $7.55 billion on Air Force capabilities.

The Australian Institute research director Rod Campbell said the fossil fuel industry has portrayed a narrative that they are a major contributor to the economy, with the Australian Institute’s research challenging this idea.

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“The major subsidies are Commonwealth tax breaks that mean the largest users of fossil fuels get a refund worth $7.8 billion on a tax that the rest of the community has to pay.

“This tax break not only funneled $1.5 billion to the coal and gas industries last year, but it made it cheaper for them to export fossil fuel to the rest of the world.

The report finds every state and territory gives a subsidy to the fossil fuel industry:

It also found that state governments spent $1.2 billion mainly through subsidising exploration, refurbishing coal ports, railways and power stations and funding ‘clean coal’ research.

  1. Queensland upgraded its coal and gas power stations, ran a ‘mine dozer replacement program’ and provided other assistance measures worth $744 million last year, only slightly less than the $818 million spent on Fire and Emergency Services.
  2. Over the longer term, the Northern Territory is the biggest backer of the gas industry, with almost $4 billion committed to an offshore gas project and $1 billion for pipelines.
  3. Western Australia is spending hundreds of millions on fossil fuel-fired power stations, including $93 million on a gas-fired power station in a town of 848 people in partnership with Chevron.
  4. NSW is putting $100 million into ‘coal innovation’, but much of the research remains mysteriously unpublished, such as a cost-benefit analysis of carbon capture and storage in the state.
  5. Victoria is spending $8.8 million to restart an onshore gas industry and develop a ‘gas roadmap’, spending dwarfed by the $100 million going to turn brown coal into hydrogen and export it to Japan.
  6. South Australia put $10.5 million into a program that aims to accelerate gas exploration and has also budgeted $30 million for a jetty mainly used by gas company Santos.
  7. Tasmania’s 2020-21 budget has no clear assistance for fossil fuels, although $73,000 was given to coal companies in 2019.
  8. The ACT is the only jurisdiction in Australia with no subsidies for fossil fuels, along with the most ambitious climate targets in the country.

World commits to net-zero emissions

During a climate summit meeting late last week, Mr Morrison promised Australia would make bankable reductions to its carbon emissions, without a concrete 2050 net-zero emissions target.

The Prime Minister said Australia will continue its plan to reach its previous reduction targets of lowering greenhouse gas production by 26-28 per cent of 2005 levels by 2030.

This is despite world leaders from the US, UK, Canada and Japan all announcing strong carbon reduction policies.

US President Joe Biden announced he would set a more ambitious target to cut his country’s emissions at least in half by 2030, after UK Prime Minister Boris Johnson pledged a 78 per cent cut by 2034.

The shadow minister for climate change Chris Bowen condemned the government for not committing to a stronger carbon emissions reduction goal.

“Former Australian military chiefs have joined the intensifying domestic and global calls on Mr Morrison for action on climate change and called on the government to take seriously its threat to our national security,” he said.

“The Biden administration has elevated climate change to a national security issue – acknowledging climate affects the world economy and migration.”

The Australian Institute challenged the government to follow the rest of the world and act on climate change. 

“Australia is increasing fossil fuel subsides, while the Biden administration is committing to phase them out. Yet again, Australian governments are going against the tide of global trends and good climate policy,” Mr Campbell concluded. 

Calls for government to end fossil fuel subsidies
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About the author

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Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

author image
Cameron Micallef

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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