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Gasoline taxes fall despite promises to slow climate change - study

by Reuters
Monday, 9 January 2017 17:18 GMT

A car is being filled with fuel at a gas station in Mexico City, Mexico, Dec. 30, 2016. REUTERS/Carlos Jasso

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Tax paid on the average litre of gasoline fell 13.3 percent to 24.2 cents in the first half of 2015 from 27.9 cents in the same period of 2003, according to global review of prices

• Average gasoline tax falls 13.3 pct from 2003-15 - Nature Energy

• Trend at variance with pledges to limit global warming

• Consumption shifts to nations with lower taxes or subsidies

By Alister Doyle

OSLO, Jan 9 (Reuters) - Average taxes on gasoline worldwide have tended to fall in recent years despite promises by many nations to do more to limit global warming, a study showed on Monday.

Gasoline, or petrol, the most common fuel used to power cars, emits the greenhouse gas carbon dioxide when burnt.

Tax paid on the average litre of gasoline fell 13.3 percent to 24.2 cents in the first half of 2015 from 27.9 cents in the same period of 2003, according to the global review of prices.

The decline is paradoxical because 83 nations including China, Brazil and Indonesia raised gasoline taxes in the period, far outnumbering the 46 that cut taxes, scientists at U.S. universities wrote in the journal Nature Energy.

"(But) even though a majority of countries reformed their gasoline taxes, progress towards higher taxes at a global level was thwarted by a shift in consumption towards countries that had subsidies or lower taxes," they wrote.

Oil exporters led by Saudi Arabia made big cuts in taxes or boosted subsidies in the period. Other major nations that reduced taxes slightly included the United States, Japan and Germany, despite promises to curb greenhouse gas emissions and air pollution.

It did not examine each nation's reasons for the changes.

"Most countries have not yet moved beyond baby steps" to impose hefty taxes on carbon dioxide emissions, despite worries about climate change, lead author Michael Ross of the University of California, Los Angeles, told Reuters.

The study also looked at global subsidies on energy and their effects.

The International Monetary Fund has estimated the total cost of fossil fuel subsidies worldwide at $5.3 trillion a year, including damage from air pollution or heat waves, floods and droughts stoked by climate change.

Monday's study said it was hard to pinpoint energy subsidies because they were often hidden, for instance in long-term contracts for a state-run coal mine to supply a power plant. That made gasoline taxes one way of tracking policy changes.

It said, for instance, there was no sign of a decline in gasoline taxes across the Group of 20 major economies, even though they had agreed in 2009 to phase out "inefficient fossil fuel subsidies".

Peter Wooders, Director of Energy at the International Institute for Sustainable Development think-tank in Geneva, praised the study as a step to help track energy price reforms that are often opaque.

G20 "subsidies tend to be elsewhere in the energy system - notably the exploration and production of oil, gas and coal and to fossil-fuel electricity generation, notably from coal," he told Reuters.

(Reporting By Alister Doyle; Editing by Gareth Jones)

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