Following announcements that fossil-fuel subsidies will be phased out, from the G-20, the Asian-Pacific Economic Cooperation (APEC) and a number of independent countries, including Iran, Nigeria and Bahrain, Subsidy Watch has decided each month to highlight important news stories that touch on this theme…

2 November  A number of Canadian media outlets, including the Calgary Herald andCTV.ca, cover the release of GSI report Fossil Fuels – At What Cost? Government support for upstream oil activities in three Canadian provinces: Alberta, Saskatchewan, and Newfoundland and Labrador. The study finds C$ 2.84 billion (US$ 2.88 billion) in oil production subsidies from federal and state sources and estimates that they will lead to a 2% additional rise in Canada’s greenhouse gas emissions by 2020. The Canadian government receives criticism later in the week following the release of a Climate Action Network report Fuelling the Problem, which documents official memos on how to down-play the country’s G-20 agreement to reform its fossil-fuel subsidies, according to newspaper The Vancouver Sun and blog Nature Canada.

8 November  The Sydney Morning Herald reports criticism of the state government’s decision to sell below-cost coal to government-run generators. The agreement would guarantee coal at A$ 32 a tonne instead of its current market price of A$ 44 a tonne (A$ prices roughly one-to-one with US$), and keep prices fixed for 17 years. Australia is one of the G-20 countries that have committed to phase out their fossil-fuel subsidies.

9 November  The International Energy Agency (IEA) publishes the World Energy Outlook 2010, providing a detailed analysis of fossil-fuel subsidies and calling for their phase out, reports a number of news outlets including the BBC, newspaper The Globe and Mail and energy blog The Energy Collective. The IEA estimates that US$ 312 million was spent on fossil-fuel subsidies in 2009 and argues that their reform would be the quickest way to control energy demand and reduce carbon emissions.

9 November  NGOs Oil Change International and Earth Track release a joint report G20 Fossil-Fuel Subsidy Phase Out: A review of current gaps and needed changes to achieve success, reports The Economist and Washington newspaper The Hill’s E2 Wire blog. The study finds that no country has initiated a subsidy reform specifically in response to the G-20 commitment and that many of the reported reform policies were in-process prior to the G-20 commitment.

10 November  According to news website Bloomberg Business Week, Iran announces that it has paid US$ 14.7 billion into bank accounts for 20 million families as compensation for its upcoming cuts to fossil-fuel and other subsidies. Each family member is said to have received two months worth of US$ 40 payments that they cannot withdraw until the subsidies are removed.

12 November  The G-20 Summit in Seoul concludes with leaders reaffirming their commitment to phase out fossil-fuel subsidies and tasking the IEA, World Bank, OECD and OPEC to report on progress at the 2011 Summit in France.

21 November  A senior official in the Iranian government states that gasoline subsidies will be maintained until at least the end of the year, according to the World Tribune andReuters news agency. Subsidies were originally due to have been cut in September. In an interview later in the week, Iranian President Mahmoud Ahmadinejad assures that the policy will “improve the living standards of low income families”.

22 November  Bahrain’s Oil and Gas Affairs Minister and Chairman of the National Oil and Gas Authority, Dr. Abdulhussain Mirza, states that fuel subsidies cannot be continued indefinitely and should be redirected to benefit those most in need, reports the Tehran Times. The Minister states that subsidies are US$ 500 million a year and rising. Two days later, news website Trade Arabia reveals that the General Federation of Bahrain Trade Unions has decided to launch a national alliance to influence government decisions on redirecting subsidies.
 
2 December  The Indonesian government announces that it is preparing plans to restrict fuel subsidies to motorcycles, public transport, fishermen and vehicles manufactured before 2005, with implementation to begin from 1st January 2011, reports news website Bloomberg. In an editorial, The Jakarta Post criticises the initiative for being mismanaged, stating that “the government has yet to decide on a scheme and propose it to the House of Representatives” and that no technical details have been released to prepare fuel distributors or consumers. The Jakarta Globe adds that the Employers Association of Indonesia has spoken out against the policy.

3 December  The Malaysian government increases fuel prices by 1.6 US$ cents as part of its ongoing subsidy cuts, reports news agency AFP. A minister in the Prime Minister’s department, Idris Jala, says that it will result in savings of 1.18 billion ringgit (US$ 0.4 billion). Several weeks later, newspaper The Star Online summarizes the year’s price reforms as part of a retrospective on 2010.

9 December  Petroleum Secretary S. Sundareshan says that India will soon make a decision on raising diesel prices, according to online newspaper livemint.com. Finance ministry officials are rumoured to be considering an increase of INR 2 (US$ 0.04) per liter. The government has vacillated on how to price diesel since gasoline subsidies were reformed last year, at which time pledges were also made to eventually reform diesel subsidies.

10 December  European Union economy ministers formally decide that the final deadline for coal mine operating subsidies will be 31 December 2018, approximately four years longer than the deadline first proposed in July. According to the Financial Times, the extension was principally influenced by Germany, which lobbied for the European framework to fit its own subsidy scheme that had provisionally set a 2018 end-point. This extension is to be the last and, as of 2011, all aid is to be used for closing mines and not maintaining access. As a G-20 member, the EU has committed to phase out and rationalize fossil-fuel subsidies.

14 December  A Finnish biogas development program sends out a press release, publicizing a decision by the Finnish government to adopt a ‘green energy taxation’ package that increases taxes on fuels for power and heat production, but exempts gasoline and diesel used for transport, despite covering other transport fuels such as biogas and natural gas.

14 December  The Indonesian parliament approves a plan to prevent private cars from using subsidized fuel, but pushes back its implementation to March, reports Reuters news agency and news website Bloomberg. State oil company Pertamina responded to criticism over a lack of preparation, saying it was ready to provide the necessary infrastructure, according to the Jakarta Globe.

19 December  At the Cancun climate talks, Tim Groser, New Zealand Minister Responsible for International Climate Change Negotiations, convenes a meeting for ministers of small- and medium-sized countries in support of fossil-fuel subsidy reform,announces a statement on the official website of the New Zealand Government. The group, ‘The Friends of Fossil Fuel Subsidy Reform’, hopes to support the G-20, APEC and others in their efforts to reform. (For more information, see the article ‘The Friends of Fossil Fuel Subsidy Reform: Supporting the G-20 and APEC Commitments’ in this issue ofSubsidy Watch.)

19 December  Iran begins cutting the subsidies it provides to a range of goods, with events being covered by a wide variety of news organisations, including the Washington Post, AFP news agency, CNN and news website Bloomberg. Prices for gasoline rise from IRR 1,000 to IRR 4,000 (around US$ 0.10 to US$ 0.39) for the first 60 liters purchased each month, and then IRR 7,000 for all purchases thereafter (around US$ 0.68). No public protests are reported although a number of sources mention a heavy police presence on the streets of Tehran. Several days later, the Washington Post reports that a number of spontaneous strikes among truck drivers take place in several cities. The Iranian news channel Press TV reports government claims that gasoline consumption fell by 10.6 million liters the day the price rises took place. By the end of the week, government figures report daily consumption of 55 million litres, a 5 million litre decrease from the previous rate of 60 million litres a day, according to new agency AFP. (For more information, see the article ‘Iran makes drastic cuts to subsidies for energy and other goods’ in this issue ofSubsidy Watch.)

26 December  According to The Himalayan Times, the government of Nepal is considering a “subsidy package for essential fuels” that would reimburse households, students and farmers by fixed amounts for purchase of cooking gas cylinders, kerosene and diesel. The package is intended to compensate for recent fuel-price rises.

26 December  In a television address, Bolivian Vice-President Álvaro García Linera makes the surprise announcement that all gasoline and diesel subsidies will be immediately removed. The ensuing controversy is covered by a wide range of news sources, including the Latin American Herald Tribune, CNN, Reuters news agency, theTehran Times and international blogging community Global Voices. With the price of diesel rising 83% to US$ 0.96 per litre, low-octane petrol 75% to US$ 0.90 and high-octane petrol 57% to US$ 1.04, transport and teachers’ unions announce an open-ended strike and plan protests in the country’s major cities alongside other groups. Days later, President Evo Morales defends the decision on the grounds that Bolivia spent US$ 380 million on subsidized fuel in 2010 and that much of its low-cost fuel is smuggled abroad, according to CNN. He commits to spend the saved money on education, health, security and increasing the minimum wage.

31 December  Various news sources report that Bolivian President Evo Morales revokes the decision to end fuel subsidies late on New Year’s Eve, including the Latin American Herald Tribune, the Los Angeles Times and news agency Bolivia Weekly. Morales cites the “recommendations of the workers and the social organizations” for the turn-around, saying that the move “is not opportune”. Later in the month, German development organisation GIZ publishes an analysis of the attempted fuel price reform, blaming the ad hoc nature of the move for its failure.
 
1 January  Pakistan increases the price of gasoline 9.0% to PKR 79.67 (US$ 0.93), light diesel by 6.5% to PKR 70.97 and kerosene oil 5.7% to PKR 74.99, according to the Wall Street Journal. The move was taken because of rising international fuel prices. According to a Time article later in the week, these reforms are quickly reversed due to opposition from junior coalition partners and opposition parties.

5 January  In stark contrast to the previous month’s decision to reform fossil-fuel subsidies, the Bolivian government announces that it will reimburse 100% the cost of successful exploratory drilling by private oil and natural gas companies, reports Fox News Latino. State-owned energy company Yacimientos Petroliferos Fiscales Bolivianos (YPFB) says it is also considering increasing the amount the oil companies receive per barrel – currently only $10, as opposed to the US$ 90 international market price.

10 January  Deaths are reported as Chileans protest against a planned 16.8% increase in natural gas prices, reports the Christian Science Monitor new website. According to the Latin American Herald Tribune, the activity has been focused in the Magallanes area, where Chile’s only gas wells are located and cold temperatures make households particularly dependent on energy subsidies.

15 January  Vietnam’s Ministry of Finance compensates gasoline dealers for losses due to rising international oil prices, increasing the total subsidy to VND 1,600 (US$ 0.86) per litre, reports national daily the Viêt Nam News. The leading petroleum distributor complains that importers and dealers are still losing VND 800−900 (US$ 0.41−0.46) per litre of petrol

16 January  Syria increases its heating oil subsidy for public workers by 72% in reaction to the President of Tunisia being driven from power, reports Reuters news agency. The same article notes that Jordan has also announced fuel price decreases, as part of a US$ 225 million package of subsidies. The subsidies were described in detail a few days earlier by The Jordan Times.

17 January  Adnan Amin, the head of the International Renewable Energy Agency (IRENA), based in the United Arab Emirates (UAE), calls on countries around the world to address fossil-fuel subsidies, reports news website Arabian Business.com. This followsa story by business magazine Kipp Report earlier in the week that UAE fuel retailer Emarat has had to increase the amount it can legally borrow to 50% of its capital, because fuel prices do not allow it to cover costs. The article states that the UAE began to phase out its gasoline subsidies in April last year.

18 January  According to Reuters news agency, the government of Chile agrees to scale back natural gas price increases, from the planned 16.8% to only 3%.

25 January  Russian Prime Minister Vladimir Putin says that RUB 24.6 billion (US$ 826 million) of subsidies will be paid over the next three years for domestic gas supplies from Sakhalin Island, according to news website Bloomberg.

25 January  Moroccan Communications Minister Khalid Naciri says that the government will keep prices stable “at any price” in 2011, as protests continue to flare in Algeria, Egypt and Yemen following the stepping down of Tunisia’s prime minister earlier in the month, reports Reuters news agency.

26 January  In his State of the Union address, United States President Barack Obama asks Congress “to eliminate the billions in taxpayer dollars we currently give to oil companies”. Days later, oil companies say this policy would be discriminatory, according to news website Daily Finance. The Obama government has already proposed cutting oil subsidies in two previous budgets, each time being rejected by the House of Representatives.
 
For readers interested in keeping track of fuel-pricing developments worldwide, GTZ's monthlyFuel Price News is an invaluable resource that announces publications and events, and major fuel-pricing news stories in different regions of the world. For more information see: http://www.gtz.de/en/themen/29957.htm