UK is EU’s leading fossil fuels subsidiser, commission finds

The UK gives more subsidies to fossil fuels than any other country in the EU, a European Commission report has found.

The report, based on the latest Eurostat data, found that the UK gives €12bn (£10.5bn) a year to fossil fuels in the UK, almost a third more than it spends on renewable energy (€8.3bn).

The report warned that while on the whole renewable energy received more subsidies across the EU than fossil fuels – 43% to 33% – total subsidies across the EU for coal, oil and gas have remained the same since 2008 at around €55bn, despite the EU and G20 previously having pledged to phase them out.

The commission noted that the EU may need to do more to enforce policies to cut carbon emissions and meet the 2C global warming target of the Paris Agreement.

‘Despite this and the international commitments made in the context of G20 and G7, fossil fuel subsidies in the EU have not decreased,’ the commission said.

‘EU and national policies might need to be reinforced to phase out such subsidies.’

Of all the EU countries, Germany provided the biggest subsidies to renewable energy, giving €27bn to renewable energy compared with €9.5bn for fossil fuels. Spain and Italy also gave more subsidies to renewable energy than fossil fuels.

Other countries alongside the UK found to give more subsidies to fossil fuels than renewable energy includes France, the Netherlands, Sweden and Ireland.

The commission identified that the UK’s 5% VAT rate on domestic gas and electricity – cut from the standard 20% – formed a significant portion of the country’s fossil fuel subsidies.

Speaking to The Guardian, a UK government spokesperson denied providing any subsidies for fossil fuels, arguing that low VAT rate is important for helping families make ends meet.

This comes despite the World Trade Organisation’s definition of subsidies, which the UK accepts, including ‘government revenue that is otherwise due, foregone or not collected’ such as reduced tax rates.

Organisations such as the Overseas Development Institute and Friends of the Earth have criticised the government following the publication of the report, urging them to speed up the transition to clean energy.

Craig Bennett, CEO of Friends of the Earth, said: ‘Spiralling climate change is going to cost people and our economy huge sums of money, through the damage, disruption and instability it causes.’

‘So it’s astonishing that the UK government is still throwing taxpayers’ money at some of the world’s largest oil and gas companies to subsidise the production of yet more dirty fossil fuels.

‘Ministers must switch funding to rapidly boost energy efficiency and renewables so the UK can power our vehicles and heat our homes without wrecking the climate.’