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Australian coal, oil and gas companies receive $4b in subsidies: report

A new report finds exploration by coal and energy companies is subsidised by Australian taxpayers by as much as $US3.5 billion ($4 billion) every year in the form of direct spending and tax breaks.

The report, "The Fossil Fuel Bailout", by the Overseas Development Institute and Oil Change International estimates that G20 countries are subsidising oil, gas and coal explorers to the tune of $US88 billion ($100 billion) annually through grants, loans, and tax deductions.

The report said that the United States and Australia paid the highest level of national subsidies for exploration in the form of direct spending or tax breaks.

Overall, G20 country spending on national subsidies was $23 billion.

In Australia, this includes exploration funding for Geoscience Australia and tax deductions for mining and petroleum exploration.

The report also classifies the Federal Government's fuel rebate program for resources companies as a subsidy.

The report said that the world's top 20 private oil and gas companies spent $US37.4 billion on exploration in 2013, less than half the $US88 billion provided by government subsidies.

Saudi Arabia and Brazil gave the biggest amount of support to state-owned enterprises. Investment by state owned firms in the G20 accounted for $49 billion in subsidies.

Japan and Korea spent the most on public finance subsidies through loans or equity provided to government-owned financial institutions such as export credit agencies.

Public finance subsidies accounted for $16 billion in G20 subsidies.

The report estimates that $11 billion of the $44 billion Ichthys LNG project off the coast of Western Australia was provided by export credit agencies from countries including Australia, Japan and France.

Queensland's three big LNG projects also received export credit agency funding.
'Subsidising dangerous climate change'

One of the report's authors, Shelagh Whitley from the Overseas Development Institute in London, said G20 governments are funding high carbon energy sources at the expense of renewable energy projects.

She said the exploration subsidies were just a fraction of the subsidies received by the fossil fuel industry every year in G20 countries.

"The fossil fuel industry writ large receives around $775 billion in subsidies," Ms Whitley argued.

"So that's much higher than what we are looking at here which is fossil fuel exploration."

Ms Whitley said the report was calling on G20 countries to immediately end subsidies for fossil fuel exploration.

"The reason we are looking at fossil fuel exploration is that we've been told in this past week by the IPCC (Intergovernmental Panel on Climate Change) ... that we have to actually keep two-thirds of fossil fuel reserves in the ground if we are to avoid dangerous climate change," she said.

"These subsidies are the equivalent of subsidising dangerous climate change."

The report also called for more transparency in budget reporting and for the elimination of public finance for fossil fuel exploration.

The authors looked at publicly available government data on exploration subsidies and used Bloomberg and Rystad Energy databases for company and commodity information.

They noted that limited transparency and wide variations in data availability "posed major obstacles to the identification and estimation of fossil fuel subsidies."

The Minerals Council of Australia says Australian government funding and tax breaks for exploration are not subsidies but legitimate tax deductions for business.

Source: ABC