"The first thing to do is to remove the subsidies for fossil
fuels," said Chris Llewellyn Smith, director of energy research at
the University of Oxford, speaking at the ReSource conference in
the city today.
Of the $400 billion a year spent subsidising fossil fuels -
which is often justified in terms of helping the poor, he said -
the International Energy Agency has found that only 8% goes to the
poorest 20%. "It's a colossal subsidy to the people in this room,
the better off," Llewellyn Smith added.
"A good, clean, material [carbon dioxide] price, that would be a
major mover, and that's where we need to go," said Ernie Moniz,
director of the Massachusetts Institute of Technology Energy
Andrew Gould, chairman of UK gas company BG Group, described the
system of fossil fuel subsidies as "completely dysfunctional",
noting that the Italian state makes more from the sale of gasoline
than Abu Dhabi does from producing it, given the tax it levies.
"I'm just very sceptical that we're going to go there, globally
… until we get the cost increment [of low-carbon technologies]
lower, to encourage policy-makers."
Yes, a carbon price would have a big effect, but it's very
difficult to do," agreed Llewellyn Smith. He suggested that those
jurisdictions that do introduce carbon pricing, such as Europe,
should introduce import tariffs on those that don't. Not pricing
carbon "should be seen as a subsidy, a subsidy for destroying the
Poppy Allonby, a managing director at Blackrock Investment, who
co-manages the firm's New Energy Fund, said: "From an investment
point of view … the main thing is stability, whether it's a subsidy
programme, or tax programme. That's the key thing an investor is
Llewellyn Smith added that there is an urgent need to increase
research and development (R&D) spending by governments. "A
higher carbon price will drive innovation in the private sector,
but there's a lot of long-term things that the private sector won't
He said that the $25 billion of publicly funded R&D in the
energy sector is at roughly the same levels, in real terms, as was
spent in 1981.