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16 June 2010

OECD chief slams fossil fuel subsidies, warns of food shortages

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As major new UN report predicts soaring food prices, influential think tank argues scrapping fuel subsidies would help tackle agricultural and environmental challenges

The Organisation for Economic Co-operation and Development (OECD) has hit out at the continuing subsidies paid out to fossil fuel producers, which some estimates put at over £380bn a year.

Speaking yesterday at the launch of a joint report with the UN Food and Agricultural Organisation (FAO) into the future of agriculture markets, OECD's Secretary-General, Angel Gurría, said that cutting fossil fuel subsidies would have wide-ranging benefits for both the agricultural sector and the wider global economy.

"One thing we could try is to reduce the subsidies in the richest countries, " he said. If they do there will be many many positive results."

Gurría also hinted that scrapping fuel subsidies could also help many government's tackle their budget deficits. "There is a big big advantage we can reap from reducing [fossil fuel subsidies]", he said. "That will yield several hundred billions. I would have to say that I hope they do away with those."

However, he expressed scepticism that controversial agricultural subsidies could be similarly phased out. "Agriculture is an older issue and has been involved in trade negotiotions since we know about these," he said.

Governments are coming under increasing pressure to tackle the issue of fossil fuel subsidies with the issue due to be discussed at a meeting of the G20 later this month. Last week, a major new report from the International Energy Agency (IEA) said subsidies worth more than $550bn (£382bn) a year to the fossil fuel industry. Some experts have predicted that global greenhouse gas emissions could be cut by over 10 per cent simply by removing subsidies for carbon intensive fuels.

The discussion about fossil fuel subsidies came as the Paris-based think tank and the FAO released the sixth edition of their annual Agricultural Outlook report, warning that while prices for agricultural commodities have dropped from the spike of two years ago the outlook for the next ten years suggests significant price increases of more than 40 per cent compared to the last decade.


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