According to a recent report in the Guardian the UK has much higher subsidies on fossil fuels than other European countries (presumably, it is the Guardian, this is a very bad thing). They report:

The UK leads the European Union in giving subsidies to fossil fuels, according to a report from the European commission. It found €12bn (£10.5bn) a year in support for fossil fuels in the UK, significantly more than the €8.3bn spent on renewable energy

But is it accurate? according to Tim Worstall, the numbers are not credible for at least two reasons: they confate "subsidy" with lower tax and they conflate lower VAT on all household energy with a boondoggle for fossil fuels.

Who is right. Is the UK offering unusually large subsidies to fossil fuels?

  • 5
    In what sense is a lower tax rate not a subsidy? If a government passes the Make Taxes Lower For Fred Flinstone bill, lowering Fred's tax rate by 10%, that's just as much a benefit to Fred as if they'd paid him $whatever-it-is directly. Put another way, if VAT on solar panels was lowered to 5%, would Tim Worstall decry it as a government subsidy for renewable energy or not? Jan 24, 2019 at 3:54
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    I feel like it's worth pointing out that the Guardian article you linked a) specifically mentions that the largest component is the VAT difference and b) specifically notes that that counts as a 'subsidy' under the WTO definition, but that the UK disagrees, citing the IEA definition. These seem like important details to include in the question. They certainly indicate Worstall is being deceptive (like that was ever in question) Jan 24, 2019 at 4:14
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    @JamesPicone They are important details that fit better in an answer.
    – matt_black
    Jan 24, 2019 at 13:47
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    @JamesPicone The sense in which a lower tax rate is not a "subsidy" is the plain definition and wide understanding of what a subsidy is. In this case the subsidy isn't even to the energy industry: it is to consumers. Moreover, the "subsidy" goes to consumption of energy from any source not just fossil fuels so is doubly misleading.
    – matt_black
    Jan 24, 2019 at 13:50
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    @JamesPicone Compare with the cost of petrol/diesel in the UK: the consumer pays far more than the cost of production (most of the price is tax). To me a subsidy would imply the consumer paid less than the production cost. But,according to some of the arguments in the Guardian, campaigners could assert that the right level of tax should be say £2/litre (vs total current price of ~£1/L) making the "subsidy" vast and in tens of billions. This seems a very arbitrary way to define a subsidy entirely open to nonsense from campaigners.
    – matt_black
    Jan 24, 2019 at 13:55


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