Mineral subsidies: what they are and why we need to know them

Mvery rarely do we hear about environmentally harmful subsidies or fossil fuel subsidies, especially in traditional media. When it happens then, we’re always a little confused. Today I will explain what it is

For definition Subsidies are financial incentives provided by governments or banks to support the production of certain products or the pursuit of certain activities.

They are called “harmful” because they are subsidies that cause loss or damage to the environment and biodiversity. These two categories then overlap because a subsidy that is harmful to the environment will have consequences for biodiversity and vice versa. In fact, financing an action that causes an increase in CO2 in the atmosphere means worsening the effects of climate change, which, by a feedback mechanism, thus a chain, will affect biodiversity.

Let’s try to be more specific by taking this example as an example fossil fuels such as coal, oil and natural gas. These subsidies can take various forms, such as tax breaks, direct financial transfers, reduced royalty rates or low-interest loans. But the result never changes!

Why are there fossil fuel subsidies?

The primary purpose of this type of activity is to make energy more accessible and cheaper, so as to promote profit maximization and economic growth. However, to date, the price to pay is very high, especially in 3 respects:

  • From a climate change perspective, encouraging the use and production of energy from non-renewable and therefore polluting sources increases the amount of greenhouse gases in the atmosphere.
  • From an economic/economic point of view market distortions are created. In fact, by lowering the cost of fossil fuels and making them more competitive compared to renewables, the adoption of clean energy sources is seriously hindered.
  • From a social point of view, it benefits disproportionate sections of the population and exacerbates inequalities.

Are all subsidies bad?

Obviously the answer is no, not all subsidies have the same weight. The ones for hydroelectric power, for example, are not and in fact, help us to rely less and less on fossil fuels. On the other hand, however, they do not have zero impact and in fact can cause problems in terms of water supply or have effects on local species.

Other subsidies that may initially appear positive or neutral turn out to be negative in the long run. An example cited by the Carbon Brief concerns the modernization of fishing fleets.

How much do environmentally harmful subsidies cost?

According to an estimate reported by Carbon Brief in this article just published, it appears that $1.8 trillion goes to these activities annually! A frightening number especially if we stop to see that most of the funds are intended for activities linked to the support of non-renewable sources and harmful activities related to agriculture (eg subsidies for pesticides and fertilizers) and water (over-exploitation and pollution) . Coincidentally, the two pillars on which human survival is based.

How is the situation in Italy?

According to what Asvis (Italian Alliance for Sustainable Development) reported, Italy is not changing direction: in 2021 mineral subsidies increased again. The amount that Italy spent in 2021 on activities, projects and projects related to fossil fuels is equal to 41.8 billion euros. A very high percentage, 7.2 billion euros higher than the previous year (+ 21%). A trend that shows no signs of slowing down, even in 2023. For more information, I highly recommend this article!

So the next time you hear about “subsidies” you’ll know it’s time to listen carefully to what’s being said because we’re at stake and not just numbers on a board!

Federica Gasbarro works with The Wom independently and is in no way associated with the advertisements that may appear in this content.

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