Subsidy WatchIssue 17, October 2007

  • Subsidies to biofuels: A time to take stock

    By Simon Upton, Director of the Global Subsidies Initiative

    The appearance of GSI's recent survey of how OECD economies are pouring billions into subsidising biofuels provides a good time to take stock of the GSI project.

    Ours is not an ideological crusade against subsidies. Subsidies are a perfectly legitimate policy tool. Spending public money to advance private ends can sometimes make sense. But those who claim that have to provide hard evidence. Government handouts have a long history of being advocated as temporary measures, but very often they become permanent.

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Also in this issue:

News

  • European Commission releases list of fisheries subsidies recipients, illegal fishers among benefactors

    The European Commission has released a list of fishing vessels that have received EU fisheries subsidies between 2000 and the beginning of 2007, following an access to information request by the World Wildlife Fund (WWF). This is the first time that the EC has identified by name vessels that are recipients.

    The 23, 828 payments amounted to some € 1.2 billion between 2000 and the beginning of 2007.

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  • Annual report on Croatian government subsidies shows overall increase of 63% in 2006

    The government of Croatia handed out almost € 1.2 billion worth of subsides in 2006, according to a recently released annual report created by the Croatian Competition Agency (CCA). The 2006 subsidies amounted to a 63% increase over 2005.

    According to the Annual Report on State Aid 2006, most of the increase was "due to significant rise of rescue aid awarded to shipyards, aid to transport sector (Croatian Railways), aid to agriculture and fisheries and regional aid."

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  • Malaysia eyes fuel subsidy cut, but holds off for now

    The Malaysian government has indicated that it may allow fuel prices to rise as high oil prices contribute to the fiscal deficit.

    Malaysia's Prime Minister Abdulla Ahmad Badawi told the Reuters news agency "we have not decided whether we want to raise the price. We are observing the situation right now."

    Nor Mohamed Yakcop, the second finance minister, told AFX News that fuel subsidy programmes will cost the government some 25 billion ringgit (US$ 7.2 billion) next year.

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Studies

  • Report analyses subsidies to biofuels in selected OECD countries

    Last month the Global Subsidies Initiative of the International Institute for Sustainable Development issued its report on subsidies to biofuels in selected OECD countries (Australia, Canada, the European Union, Switzerland, the United States).

    The report arrives at a time of tremendous growth in biofuels production and consumption. Globally, ethanol production has grown at double-digit rates in each of the last four years.

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  • GAO finds farms subsidies a factor in declining native grassland

    The United States Government Accountability Office (GAO) has found that native grassland continues to decline in the U.S., particularly in South Dakota where relatively high subsidies are offered to farmers who convert grassland to cropland.

    The GAO says analysis shows that farm program payments are an important factor in whether grassland is converted to grow crops. A 2006 study by the United States Department of Agriculture, for example, revealed a link between crop insurance subsidies expanding cropland.

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  • Canadian think-tank finds industrial electricity not responding to prices in Ontario

    A study by the Canadian think-tank The Fraser Institute has found that industrial electricity consumers in the Province of Ontario have not become more responsive to prices since the wholesale market was opened in 2002.

    The study, which updates an analysis done in 2003, reveals that most industrial electricity consumers did not reduce consumption when wholesale prices rose. The blame is laid on subsidies and rebates which overlay the wholesale market, insulating industrial consumers from price increases.

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