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John Constable Savages Tulloch Op-Ed

August 16, 2017
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By Paul Homewood

 

A good follow up from John Constable on that fatuous article by Maurice Tulloch in the Telegraph the other day:

 

 

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The Daily Telegraph recently published a claim by Aviva that subsidies to fossil fuels in the United Kingdom amounted to $6.5 billion dollars a year. Examination of the source behind this claim, data from the Overseas Development Institute (ODI), reveals that it consists of $1 billion of tax relief and $5.5 billion of public finance to international aid projects. Neither of these are “subsidies” in any meaningful sense.

In a recent op. ed. for the Daily Telegraph (11 August 2017), Maurice Tulloch, the chief executive of international insurance at Aviva, demanded that subsidies to fossil fuels be brought to an end, terming them “a relic of the past”.

As a general rule, subsidies are undesirable, so Mr Tulloch would seem to be making an entirely reasonable suggestion, except that on closer examination the things he refers to as “subsidies” are only so on an extremely questionable definition.

In his reference to the United Kingdom and such subsidies he writes:

Just recently, the Health and Environment Alliance launched a report that laid out the costs of the health impacts that come from fossil fuel subsidies. In the UK, health costs arising from fossil fuel driven air pollution are almost five times higher than the subsidies paid. Over $6bn of public money is spent on the industry, and the health costs from premature deaths linked to air pollution run to over $30bn.

Six billion dollars per year is a lot of money, and very surprising in the UK context. That alone should have set off an alarm bell somewhere in Mr Tulloch’s office. As we shall see, it was not wise to rely on the HEAL study for information, and one wonders if Aviva made any inquiries into the methodology and criteria behind that striking number.

Investigation would have revealed that the data in the Health and Environment Alliance paper, Hidden Price Tags: How ending fossil fuel subsidies would benefit our health was not generated by HEAL itself, but was instead drawn from work by the Overseas Development Institute (ODI) in London. The ODI’s main publication on this subject, Empty promises: G20 subsidies to oil, gas and coal production is the source for many of the principles used in the ODI’s work, and there is an important page on the UK (p. 80), but the data actually cited by HEAL seems to come from the ODI website: “G20 subsidies to oil, gas and coal production: United Kingdom”.

Putting this all together, it would not have taken Mr Tulloch’s researchers long to find out that the rather striking claim of $6.5bn subsidy to fossil fuels in the UK consists of $1bn of tax relief, mostly for the decommissioning of oil rigs, and $5.5 bn of public finance for overseas development of fossil fuel related projects, in other words development aid to extend energy access to the world’s poor. Neither of these are subsidies.

Tax relief is a perfectly justified business related exemption of a general kind extended not only to the fossil fuel industry, but to all sorts of companies, including, one imagines, international insurance companies. To call it a “subsidy” is to stretch the definition beyond breaking point.

Bad though that is, it is still more absurd to classify as a subsidy the public finance provided as overseas aid to support energy access projects. This aid happens to be spent on fossil fuels, because they are fundamentally economic, and bring the vast welfare benefits of low cost energy to as many people as possible. Judging from other parts of the ODI’s study, they would irrationally prefer such money to be spent on renewable energy that is uneconomic (and unaffordable even in the developed world), and would benefit far fewer people and probably benefit them much less.

The Overseas Development Institute approach to fossil fuel subsidy is childish and tendentious, not to say plain silly. Neither the Health and Environment Alliance, nor Mr Tulloch and Aviva, should have touched it with a barge pole.

https://www.thegwpf.com/subsidies-to-fossil-fuels/

 

Readers may recall I covered the ODI report last year here.

In particular, I addressed the tax break issues. In all cases, North Sea oil producers are still paying full corporation tax.

I also covered the overseas finance projects, which are all on a commercial basis, rather than aid. Furthermore, the ODI even include our “share” of loans via the World Bank etc:

The UK also contributed an annual average of $53.7 million to fossil-fuel exploration projects from 2010 to 2013 through its shares in the World Bank Group, the European Bank for Reconstruction and Development, the European Investment Bank, and the Asian Development Bank

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7 Comments
  1. August 16, 2017 3:14 pm

    Well done John Constable. This needs to be published in the Telegraph. If it isn’t, then it will just prove how low the Telegraph has sunk and how it has become a purveyor of fake news from the troughers and scamsters.

  2. August 16, 2017 5:08 pm

    If they looked through the other end of their telescope, they might notice how much tax the ‘fossil fuel’ companies have been paying per year. It’s shrunk recently as North Sea oil dries up and low prices have reduced activity.

    http://www.gov.uk/government/uploads/system/uploads/attachment_data/file/637097/Table_11.11_June_2017.pdf

    Annual figures of £5-10 billion or more were commonplace at one time. Then there’s the fuel duty and fuel VAT paid by motorists…

    ‘Fuel duties are levied on purchases of petrol, diesel and a variety of other fuels. They represent a significant source of revenue for government. In our latest forecast, we expect fuel duty to raise £27.5 billion in 2017-18. That would represent 3.7 per cent of all receipts and is equivalent to £1,000 per household and 1.4 per cent of national income.’

    http://budgetresponsibility.org.uk/forecasts-in-depth/tax-by-tax-spend-by-spend/fuel-duties/

    • nigel permalink
      August 16, 2017 5:24 pm

      When the Scotish Nationalists were boasting how their finances would be wonderful after separation, because of North Sea oil revenues, I do not recall them pencilling them in as negative taxes, i.e.SUBSIDIES – coming FROM SS Haggis!

  3. Vernon E permalink
    August 16, 2017 5:49 pm

    The Telegraph has lost its way (for along time). Time to try the Times crossword.

    • Stuart Brown permalink
      August 16, 2017 7:22 pm

      ‘Time to try the Times crossword.’

      Aren’t they owned by the Murdoch clan? I wouldn’t willingly put a single penny in their pockets.

  4. John in cheshire permalink
    August 17, 2017 9:52 am

    Why is the head of Aviva involving himself in such matters? Is he speaking personally or on behalf of Aviva? Did he seek permission from his board of directors before he went public? Is he abusing his position to obtain publicity for something that isn’t part of the company’s daily business?

  5. Coeur de Lion permalink
    August 17, 2017 1:44 pm

    Tilloch sounds like a lefty who hates the poor.

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