Fossil dependency

Energy policy is dictated by state intervention. There is still a democratic choice to decide which one we want to have.

The story of the impossibility of making an energy transition - having economies powered by renewable energy sources instead of polluting fossil fuels - is generally dismissed by the argument: “markets have fossil fuels as the preferred source, interfering with such a choice would have significant costs ”.

That is, the market is endowed with a decentralized intelligence from private agents, with which the centralized stupidity of States cannot compete. State intervention sucks out public resources for ruinous projects, so it is better that any intervention is as light as possible. It is necessary to let “nature” flow, and thus make our economies based on fossil fuels.

There are several flaws in this argument, and there is one fact that kills him at birth: the choice for fossil fuels is highly sponsored by the States.

This was revealed a long time ago, and a new investigation by Investigate Europe - a multinational team of European journalists - explained it even more. Each year, at least 137 billion euros are channeled by 30 European states - EU27 plus Norway, Switzerland and the United Kingdom - to the fossil sector. Between tax deductions for diesel fuels, almost nonexistent taxes for the aviation sector, public investments in extractive operations, benefits for the use of company cars, support for fossil exploration infrastructures, ways to drop public money on greenhouse gas emissions greenhouse are immense.

In the meantime, the European Union is committed to a decarbonisation agenda - the European Green Deal - in which the European Commission expects to reduce emissions by 55% for 2030 compared to the 1990 level, reaching carbon neutrality in 2050. This for now has an estimated budget of 260 thousand euros per year, that is, the annual value foreseen in 10 years to fight the destruction of the conditions of existence of civilization is only about double the 137 billion donated annually for the protection of profits of fossil companies. European priorities are bizarre.

Achieving any significant targets for reducing greenhouse gas emissions implies, in the first place, the elimination of subsidies. However, soon their official inventory process is full of critical gaps. For example, the “frugal” Netherlands, with almost six billion euros delivered annually to fossils, denies any subsidization of fossil fuels. Intentions remain in the air, and European rhetoric to combat climate change has a hard time materializing.

Does the situation look black in Europe? a paper published by the IMF reported that in 2017, around the world, the fossil industry received $ 5,2 billion in government subsidies. That is, 6,3% of the world Gross Domestic Product. Although with a more comprehensive criterion to define subsidies - it also includes an estimate of the cost of negative externalities of these -, the data point in the same direction: the world fossil economy is a creation of the States, only after the markets arrive. It is a truly subsidiary-dependent sector that, in addition to destroying the planet's climatic balance, can only live on account of States and money from public funds.

But the problem does not end with state budgets. For example, according to a 2017 study by the Center for Climate Change Economics and Policy, the Quantitative Easing of the European Central Bank allocated 62,1% of bond purchases to companies in sectors highly responsible for the emission of greenhouse gases, although they only represented 18% of the Gross Value Added.

There are several opaque mechanisms - from the financing that central banks provide, to infrastructure policies focused on individual transport and airports - serving as instruments of state policy at the service of the fossil industry. It is over decades of these policies that the fossil economy rests.

And how is Portugal in this panorama? By the criteria of Investigate Europe, this country in which the Government affirms itself dedicated to the fight against climate change, in 2019 it subsidized with 436 million euros the use of fossil fuels in activities such as air and sea transport, to which 268 joined million in emission licenses offered. With several other headings (up to the offshore from Madeira participates in the party) the total reaches almost 900 million euros per year of tassels to the fossil sector.

Given the recent intentions of the Portuguese Government to launch hydrogen, the distrust of several parties is not surprising, given the legacy of projects in the energy sector that primarily serve to guarantee profit through public funds. Strange is the selectivity of mistrust, absent when it comes to subsidizing fossil projects. The common denominator in both is the desire to guarantee rents, whether generated by oil or through renewable means.

We live in fossil economies that are sustained by state intervention. The necessary energy transition is to stop feeding the fossil part and create a renewable sector in due time - that is, in this decade - to meet climate targets.

The agenda of governments like the Portuguese currently involves maintaining the parasitic fossil sector, while simulating climate action that serves little more than giving more business opportunities to the usual rentiers. Energy policy is dictated by state intervention. There is still a democratic choice to decide which one we want to have.


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