Australian federal and state government subsidies that encourage fossil fuel use and help drive the climate crisis will reach $16.3bn this year after leaping by nearly 10%, according to a new analysis.<\/p>\n
It found federal and state governments will pay or forgo the equivalent of $31,020 each minute in 2025-26 to subsidise companies producing and using coal, gas and especially oil, mostly in the form of diesel.<\/p>\n
The annual analysis by progressive thinktank the Australia Institute<\/a> found fossil fuel subsidies were now increasing at a more rapid pace than funding for the national disability insurance scheme (NDIS), which has been criticised in the past for cost blowouts.<\/p>\n Sign up: AU Breaking News email<\/a><\/p>\n Using government budget papers and announcements, the institute said national support for fossil fuels was expected to grow by 9.4%. The cost of the NDIS was forecast to rise by 7.6%.<\/p>\n The biggest subsidy was the federal government\u2019s fuel tax credit scheme, which refunds mining companies, farmers, tourism operators and other industries the excise paid on petrol and diesel.<\/p>\n Most consumers pay an indexed excise \u2013 currently 52.6c a litre, and increasing every six months \u2013 when filling up their car. Businesses that use the fuel to run vehicles on private roads, drive heavy vehicles on public roads or buy diesel to run machinery qualify for a rebate. The scheme was forecast to cost $10.8bn this year, up from $10.2bn last year.<\/p>\n The credit scheme has been maintained under Labor and Coalition governments and is backed by lobby groups such as the Minerals Council of Australia. Supporters say fuel excise is collected to fund roads and businesses that use the fuel to run cars and equipment on private roads and properties should not have to pay it.<\/p>\n Critics of the scheme, including the Australia Institute, say the overwhelming majority of fuel excise contributes to general budget revenue and is not explicitly linked to road building and maintenance. They say the refunds encourage greater burning of fossil fuels and work against policies that incentivise businesses to embrace lower emissions vehicles and other technology.<\/p>\n Rod Campbell, the Australia Institute\u2019s research director, said the main benefits of the scheme were multinational mining companies. Coalminers were expected to receive more than $1bn this year.<\/p>\n \u201cCutting back subsidies like these, which make the community and the climate worse off, are an obvious priority for any government that says it is concerned with the budget bottom line, inequality, or climate change,\u201d he said.<\/p>\n Campbell said those calling for the subsidy to be cut back included the Australian Council of Trade Unions, the mining company Fortescue, the Australian Academy of Technological Sciences and Engineering, and the Labor Environment Action Network. Some have backed a proposal by the thinktank Climate Energy Finance for a cap that limits a company\u2019s rebates to $50m a year.<\/p>\n Matt Kean, the chair of the government\u2019s Climate Change Authority and a former New South Wales Liberal treasurer, has also backed a reduction. He told an Australian Financial Review event in October<\/a> the idea of continuing to give big miners a diesel fuel rebate rather than doing more to help Australian consumers switch to renewable energy was \u201cinsane\u201d.<\/p>\n Kean told Guardian Australia on Wednesday that fossil fuels were already contributing to climate instability, and the war in the Middle East was a reminder that \u201cfossil fuel reliance brings with it unwanted price volatility<\/a> and economic instability too\u201d. \u201cThe sooner we shift to renewable energy the more energy independence we\u2019ll have,\u201d he said.<\/p>\n Campbell said the government had signed a declaration on the transition away from fossil fuels<\/a> at the Cop30 climate summit in Bel\u00e9m, Brazil<\/a>, last year and should act in line with that. Countries that signed the declaration said they recognised the need to \u201cphase out inefficient fossil fuel subsidies as soon as possible\u201d.<\/p>\n