The United Kingdom provides the largest fossil fuel subsidies in the European Union, according to a European Commission report. The study found that the UK spends €12bn (£10.5bn) annually on support for coal, oil and gas, significantly more than the €8.3bn allocated to renewable energy.
The report warns that total subsidies for fossil fuels across the EU have remained at 2008 levels, despite pledges by both the EU and G20 to phase them out. These subsidies are seen as a barrier to the rapid transition to clean energy needed to combat climate change.
Germany provided the highest overall energy subsidies, with €27bn for renewables, nearly three times the €9.5bn for fossil fuels. Spain and Italy also favoured renewables over fossil fuels. However, the UK, France, the Netherlands, Sweden and Ireland all directed more support to fossil fuels.
A significant portion of UK fossil fuel subsidies comes from the reduced 5% VAT rate on domestic gas and electricity, compared to the standard 20%. The UK government disputes the classification, stating it does not subsidise fossil fuels under its own definition. However, experts argue that tax breaks, such as those for North Sea oil and gas operators and fuel duty freezes, constitute subsidies.
Labour's shadow business and energy secretary, Rebecca Long-Bailey, criticised the imbalance, urging the UK to follow Denmark and Germany in investing heavily in renewables. Friends of the Earth CEO Craig Bennett warned that climate change will cost the economy dearly if subsidies continue.
