Energy subsidies rebound to pre-financial crisis levels

HOUSTON — Global subsidies for fossil fuels have returned to levels not seen since before the financial crisis in 2008, reaching up to $1.9 trillion, according to a new report.

Grants and tax breaks designed to lower energy production costs fell sharply when commodity prices plunged in the global economic recession.

Compared to the effect of commodity price fluctuations, policy changes that lowered financial support for fossil fuels barely registered before global subsidies rebounded, the Worldwatch Institute reported Wednesday. In 2011, the figure climbed to 2.5 percent of global gross domestic product.

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Similar subsidies were much smaller for renewable power sources and biofuels, at $88 billion three years ago, but the growth of those subsidies have outpaced worldwide governmental support for oil, natural gas and coal production. About two-thirds of the renewable subsidiaries went to electricity, the group reported.

Developed countries like the U.S. and Canada have focused on production subsidies, while developing economies like China and India have extended tax breaks and lowered the price of government energy services like electricity to ease costs for low-income consumers.

Of the energy subsidies in developing nations, about $285 billion went to oil, $104 billion supported natural gas consumption and $131 billion lowered electricity prices. Meanwhile, government support for fossil fuel production averaged $55 billion to $90 billion in more mature economies.

Worldwatch, a research and advocacy group supporting renewable energy, compiled data primarily from the International Energy Agency and the Organization for Economic Cooperation and Development.