Subsidies

Dirty subsidies

2020 was supposed to be the year the EU would launch its ambitious plan to tackle the climate crisis. But why does Europe sabotage its climate goals by subsidising the fossil sector by more than €137 billion per year?

July 2020

2020 was supposed to be the year the EU would launch its ambitious plan to tackle the climate crisis. But why does Europe sabotage its climate goals by subsidising the fossil sector by more than €137 billion per year?

“Today’s the start of a journey. This is Europe’s man on the moon moment.”

That is how, in December of 2019, European Commission President Ursula von der Leyen described the European Green Deal.

2020 was supposed to be the year the EU would launch its ambitious plan to tackle the climate crisis.

Yet, the actions of many of its member states show a pattern of climate hypocrisy.

While Europe is trying to achieve an energy transition with hundreds of billions of Euros spent on the ambitious Green Deal, all European member states with fiscal regulations and tax advantages are also maintaining their fossil sector. Poland continues to pump money into the coal mines; Italian tax breaks for the use of diesel total more than five billion euros, and the Greek government continues to pay the fossil sector to transport shiploads of oil and diesel from the mainland to the tourist islands to keep power running in the high season.

When we calculated tax exemptions for the fossil sector, the car, aviation and shipping industries and the free certificates that companies receive from the government to emit Co2, we found that European countries subsidise the fossil sector by more than 137 billion Euros per year. Before and after Covid-19, this shows no sign of changing; on the contrary.

It has been argued that, “Behind each tax break and subsidy for fossil fuels you have a lobby”. Aligned against the European Green Deal are powerful pressure groups seeking to maintain the status quo. But why do Europe’s leaders stick with this dangerous plan and sabotage their own climate protection policy? Investigate Europe explored this question in discussions with ministers, commissioners, members of parliament, lobbyists and scientists and came across an almost inextricable tangle of historically grown dependencies, political opportunism and a fundamental misconstruction of European legislation.

The countries marked in grey indicate that the numbers are not from Investigate Europe's original research, but from other sources.

In our calculation for the above map, we have included direct subsidies, tax relief and tax exemptions, investments in infrastructure for the fossil sector and free allocation of emission rights. We have used government sources and reports from the OECD and organisations such as the Climate Action Network and think tanks like the German Institute for Applied Ecology. For each subsidy, we have used the latest available data from the years 2016-2019. In total, the 27 EU countries plus Norway, Switzerland and the United Kingdom subsidise the fossil industry with at least €137 billion annually. For 19 of these 30 countries, only data about free emission permits were available, and that too only for states from the OECD. This covers only a part of the support for fossil fuels. Thus, the actual amount of support for the use of fossil fuels is probably bigger.