Hacker News Reader

Comment by IronRanger | Hacker News Reader

There are still countries around the world which subsidise fossil fuels. Not indirect subsidies like exporation writeoffs for corporations, but actual incentives for consumers to consume in the form of below-market pricing.

https://www.iea.org/data-and-statistics/charts/value-of-foss...

And even without subsidies, petrol and diesel are undertaxed in almost every country.

Properly taxing fossil fuel is surely a more cost-effective preliminary step compared to schemes like CCS.

View on HN

While this is true, there is a reason why so many poor countries have to subsidize fossil fuels.

In those countries, if you are middle class or below, without those subsidies, you might not be able to heat your house, go to work, or fuel your tractor.

So unless you want revolts, it's not going to be possible to remove those subsidies unless massive investment at a world-wide scale in nuclear, hydro, and other types of renewables, as well as a serious ramp up of cheap (3000-9000$) EV production, actually makes it possible for the average Joe there to survive without fossil fuel subsidies.

There are also other countries that are richer in which this doesn't apply, for which there is no excuse.

Changing those subsidies to income tranfers of money would be cost neutral and strictly better or equal for everyone and save on emissions.

The countries that I can think of which subsidize oil also produce it. Plus, it's easier to embezzle money than oil – so better to keep that.

It wouldn't be. Governments in such poor countries often buy fossil fuels below international market prices as they produce them, and directly giving money is problematic because a lot of people do not have bank accounts, and that fraud and embezzlement is a huge issue.

I agree that they should be made progressive and thus reduced immediately and phased out as soon as possible, but it's just not feasible the remove them completely immediately.

Getting fossil fuels below market prices sounds like a way to fund the transfers to me.

In theory, yes, but it's often more complicated than that. Often those agreements don't allow the governments to actually sell them internationally at below market prices.

Also, you completely glossed over the rest of the comment, which complicates things even more.

These agreements sound curious as they're tantamount to foregoing fuel sales income to the counterparty. Are you really free favours that the governments are getting?

Re bank accounts and embezzling, these are no worse problems, subsidized fuel is also vulnerable to smuggling abroad and other kinds of corruption and systems of exchange other than gasoline are well known technology in history of human societies, however attractive the mad max model is...

Governments of oil-producing poorer nations often ask of companies producing fossil fuels that they give some part of their production at a profitable, but under market prices, in order to be allowed to operate.

My point wasn't just embezzling, it was just distribution. A large section of your population might just not have a bank account.

Also, it's way harder to embezzled fuel that money, and I'm baffled that you'd think some kind of government official could steal an appreciably high volume of fuel to be worth enough for the risk without involving a large number of accomplices and thus exponentially more risk. It's really incomparable.

That is the political justification but several studies have found that the benefits flow mostly to the wealthy. If you are poor in a 3rd world country, you cannot afford a car.

This study from 2012 shows the top 20% get 43% of the benefit, the bottom 20% only 7%:

https://www.worldbank.org/en/news/feature/2012/05/09/real-co...

Moreover these subsidy schemes are hugely expensive, and the money is better used elsewhere - eg. education, family planning, clean infrastructure.

It's not true that if you are poor in a third world country, you cannot afford a vehucle. A lot of poor people in third world countries instead use and indeed share incredibly old cars from the 60s-70s, or motorcycles. It is often literally a matter of life and death - if you get stung by a scorpion in the Atlas mountains, unless your family or village have a car and fuel for it, you're just not getting medical care, which is why you'll see many such very old cars there. This is a real issue - the micro-village in the mountains where part of my family lives had one of my aunts die as a baby because a scorpion bit her and she couldn't be brought to a hospital due to a lack of transportation. They bought a Citroën 2CV after, and it's still used up to this day.

Now, of course, like all non-progressive subsidies, they benefit the wealthy disproportionately, because they make disproportionate amounts of money. But for the bottom 20%, those 7% of the subsidies are a lot, because they often make less than 7% of the income.

So a workable solution would be to make these subsidies progressive, tied to income and consumption, but unless you've lived there it's difficult to understand just how bad removing them altogether would be. It could literally lead to revolts.

Also, that study is hugely problematic because it takes the entirety of the world together, instead of operating at national scales. I already agreed that for richer countries this should be phased out, and subsidies are likely to be much higher in richer, often non-producing countries, than in poor countries.

Also, before they got solar panels and batteries around 8 years ago, they were still reliant on kerosene for lighting.

> It could literally lead to revolts.

Forget the third world altogether, it has already led to revolts in France, the entire movement of the yellow vests is based on rural low middle class people revolting against the state for an increase in fuel taxes along several older other sticking points

But, if you want to sell this idea to the people, give it the nationalist spin, say that the country is suffering as a consequence of dollars escaping from the country per the subsidies, and subsidies have to be changed/reformatted to help the nation itself, etc, etc

Anyhow you are completely right when it comes to the vehicles bit, saying it as someone from a third world country

> Forget the third world altogether, it has already led to revolts in France, the entire movement of the yellow vests is based on rural low middle class people revolting against the state for an increase in fuel taxes along several older other sticking points

It's also that they aren't offered any alternative to using fuel (good luck finding public transit in these rural regions; the population density simply makes it impossible).

And where's the money from the fuel tax going? Financing alternatives for these people or is it funneled into some civil servant's retirement funds?

> a serious ramp up of cheap (3000-9000$) EV production

I really can't wait to see electric trickle down to the budget market. I get Tesla's approach of making EV's sexy with self driving/ludicrous mode/etc and I know the cost of batteries is a limiting factor right now, but I'd love to see how cheaply you could build an electric car.

It seems like with virtually no moving parts, and battery production getting better, you aught to be able to build an EV for a good deal less than an equivalent ICE vehicle.

Kandi was already planning to sell an $8000 electric car in California. I believe that includes subsidies and the car only gets 59 miles of range, but it's a start.

Reply on news.ycombinator.com