Posted by: Dr. Breffni Lennon | June 22, 2012

Jon Cloke’s thoughts on the Avaaz petition to end fossil fuel subsidies #Rio+20

In a recent contribution to the CRIT-GEOG-FORUM, Dr. Jon Cloke (Loughborough University) provided some very thought-provoking observations on the inherent complexities associated with the fossil-fuel subsidy issue. I share the notion that we need a more nuanced approach to the issue, but I also have to admit that I did sign the petition. My reasoning for doing so, was that sometimes the more simplistic gestures (in this case the petition) can often be an effective way to get policy-makers to pay attention. And with politics being what it is (the art of compromise), issues pertaining to social justice and equity can then begin to be addressed once policy-makers realise that subsidies are indeed a cause for public concern. I welcome your comments…

A typically crass, simplistic piece of rich country gesture politics, if I might say so…..

The situation re fuel subsidies in poor countries of the global south is, of course, far more complex than this PR campaign would suggest. Let me quote you from the Citizens’ guide to fuel subsidies in Bangladesh:

“Energy subsidies contribute to raising household incomes, both directly and indirectly. When households pay less for consuming energy, they have more disposable income to spend on other things. In addition, households benefit indirectly from energy subsidies since they can consume many other goods and services at cheaper prices, as subsidies reduce the energy input costs for these products to the producers, distributors, retailers and service providers. Conversely, if energy prices were to increase as a result of reduced subsidies, the direct impact on real income would be multiplied by indirect impacts throughout the economy as the costs of transportation, irrigation and other goods and services go up…”

BUT

“In short, energy subsidies are largely inequitable and represent a significant reallocation of public funds to higher-income earners. However, because the poor spend a high proportion of their income on energy, they are very vulnerable to increases in the cost of kerosene, LPG, petrol and electricity. Taking that fact into account should be a critical part of any reform strategy…”

AND

The population of Bangladesh still relies heavily on traditional fuels, with an overwhelming number of rural households using biomass for cooking. Only the relatively better off households use kerosene and LPG. The over-exploitation of biomass has caused large-scale deforestation and widespread use of crop residues as fuel and fodder. The collection of cow dung has significantly reduced the soil fertility and its organic content matter. Fuel subsidy reform could lead to an increase in biomass consumption……”

AND

“Since poorer groups spend a larger share of their budget on food and other agricultural products, they are likely to lose less, as these prices are less sensitive to fuel price changes. However, the urban poor are likely to be more vulnerable to fuel price hikes.” (A Citizens’ Guide To Energy Subsidies In Bangladesh (2012) The International Institute for Sustainable Development)”

So, a highly complex picture in which the poor benefit the least from fuel subsidies but nonetheless depend on them because fuel costs constitute a far larger component of their household budget and the ripple effects of removing them in the wider economy would put up the prices of a whole load of other goods that are vital to them. Plus, if you did suddenly remove fuel subsidies everywhere, there would be avast (avaaz, geddit?) increase in the consumption of biomass – bye-bye, rainforest!

But never mind, why should those greedy poor bastards in countries like Nigeria and Libya get cheap fuel in a country where that’s about the only benefit they’ve ever had from from the massive oil reserves in their country? Let them eat dirt!

Lastly, I’ll sign this petition (as a life-long cyclist) when every one of the 29,050 people who’ve signed it so far guarantee to give up their cars – let’s point the finger of blame where it really belongs, shall we?

Cheers!

Dr Jon Cloke
LCEDN/MEGS Research Associate
Geography Department
Loughborough University

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