EU says fossil fuel subsidies undermine its climate ambitions

BRUSSELS (Reuters) - A senior European Union official on Thursday urged member nations to stop subsiding fossil fuels responsible for greenhouse gases which are undermining the bloc’s policies to tackle climate change.

FILE PHOTO: European Commission Vice President Frans Timmermans and EU Commissioner for Energy Kadri Simson (not pictured) address a joint news conference at the EU Commission headquarters in Brussels, Belgium October 14, 2020. REUTERS/Francois Lenoir/Pool

“The European Green Deal is clear: fossil fuel subsidies have to end,” EU Energy Commissioner Kadri Simson told the European Parliament on Thursday, referring to the EU’s plan to reach net zero emissions by 2050.

“They remain a major impediment to a cost-efficient energy and climate transition, but also to a functioning internal market.”

EU countries spent 159 billion euros ($188 billion) on energy subsidies in 2018, according to a Commission report published this month. Nearly a third of that went on fossil fuels.

Fossil fuel subsidies among the EU’s 27 countries increased by 6% from 2015-2018, though some, including Austria, Denmark, Estonia and Hungary, bucked the trend.

The handouts include support from governments and public bodies to coal, gas and oil, in the form of grants, loans, tax incentives or price support.

The Commission will reform EU tax rules next year, to tackle exemptions for some fuels. Simson said the Commission will work with member states to end polluting subsidies.

The economic fallout of the coronavirus pandemic might have led to additional energy subsidies, including for fossil fuels, the Commission said, though full data is not yet available.

Hitting Europe’s climate targets will require a sharp drop in fossil fuel use and massive investments in low-carbon energy.

The Commission warned that Europe’s spending on clean energy research has slowed in recent years.

But EU climate policies do not envisage an immediate fossil fuel phase-out. Some countries plan to switch from coal to less polluting gas, or use gas plus carbon capture technology to produce hydrogen.

“In the beginning of this huge transition, we will still need fossil fuels,” said EU lawmaker Bart Groothuis.

Reporting by Kate Abnett; Editing by Andrew Cawthorne