ACCRA, Ghana - A new U.N. report urges countries to phase out energy subsidies, saying they often waste money, do not always help the poor and are bad for the environment.
Gas-rich Russia leads countries spending the most in energy subsidies, laying out $40 billion a year, according to the U.N. Environment Program report released Tuesday at a 160-nation conference aimed at drafting a new treaty to contain global warming. Oil-exporter Iran is second, spending $37 billion, while Saudi Arabia, the world's leading oil producer, is also among the top five.
Governments spend as much as $300 billion a year total in subsidies that encourage consumption and discourage efficiency. The subsidies delay the transition from dirty energy to more climate-friendly sources of power, said the UNEP report.
Subsidies "don't always help the poor who need it most" and often benefit the wealthy, said Kaveh Zahedi, UNEP's climate change coordinator. Some African countries are known to spend all the foreign development aid they received to pay for the increase in fuel prices, which may be politically popular but economically damaging.
"In the final analysis, many fossil fuel subsidies are introduced for political reasons but are simply propping up and perpetuating inefficiencies in the global economy," said UNEP director Achim Steiner, who also is a U.N. undersecretary general.
In a statement released with the report, Steiner advised governments to "urgently review their energy subsidies and begin phasing out the harmful ones."
Several countries have felt the consequences of cutting subsidies. Last year, for example, riots erupted in Myanmar when cash-strapped authorities raised fuel prices as much as 500 percent.
The U.N. report said money could be redirected into programs that support low income families more directly and should be targeted to promote green energy, such as wind or solar.
Cutting off the subsidies would be good for the environment as it would reduce carbon emissions by as much as 6 percent, said Zahedi.
"It's clearly an area that we need to re-examine in our fight against climate change," he said on the sidelines of the conference.
The conference is the third session this year working on the details of a climate change accord to succeed the Kyoto Protocol, which expires in 2012. Scientists say the emission of greenhouse gases must peak within 10 to 15 years and then drop sharply to avoid potentially catastrophic changes in the climate.
By Arthur Max
Associated Press
