Billlions Spent on Fossil Fuels Incentives

Archived News, Posted on 01 Mar 2011

Adam Morton
March 1, 2011
The Age

TAXPAYERS spend about 12 times more encouraging the use of fossil fuels than on climate change programs - and the sum is growing.

Fossil fuel incentives and subsidies will cost about $12.2 billion this financial year, compared with $1.1 billion spent on programs designed to cut greenhouse gas emissions and boost clean energy research.

An Australian Conservation Foundation analysis found the cost of the incentives has increased by $1.6 billion since 2007-08, the final year of the Howard government, while spending on climate programs had risen just $500 million. The biggest fossil fuel incentives were in unclaimed revenue, including about $5 billion in fuel tax rebates for greenhouse-intensive industries.
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More than $1.1 billion was spent on fringe benefits tax concessions for company cars.

Don Henry, executive director of the Australian Conservation Foundation, said the government must cut fossil fuel incentives at the May budget if it was to convince people it was serious about tackling climate change. Keeping them would undermine the value of a carbon tax, he said. ''Funding these is bad for the climate and it is bad economics.''

The analysis comes as documents released under freedom-of-information laws showed bureaucrats had identified up to 17 programs costing more than $8 billion a year that could have to be cut for Australia to meet a Group of 20 agreement that member countries would eliminate inefficient fossil fuel subsidies that led to wasteful consumption.

Mr Henry said the tax concession for company cars was a ''virtual pollution factory'' that emitted as much as a medium-sized coal-fired plant each year.