The OECD and IEA have targeted rising subsidies for fossil fuels as a brake on national revenues and a cause of unnecessary greenhouse gas emissions.

Governments and taxpayers spent $409bn last year supporting the production and consumption of fossil fuels, according to analyses by the two organisations.

“Both developing and developed countries need to phase out inefficient fossil fuel subsidies,” said OECD secretary-general Angel Gurria.

“As they look for policy responses to the worst economic crisis of our lifetimes, phasing out subsidies is an obvious way to help governments meet their economic, environmental and social goals.”

OECD secretary-general and IEA executive director Maria van der Hoeven said subsidies to fossil-fuel consumers often fail to meet their intended objectives of alleviating energy poverty or promoting economic development.

Instead they create wasteful use of energy, contribute to price volatility by blurring market signals, encourage fuel smuggling and lower competitiveness of renewables and energy efficient technologies, she said.

“In a period of persistently high energy prices, subsidies represent a significant economic liability,” she said.

IEA estimates that subsidies that artificially reduce the price of fossil-fuels amounted to $409bn in 2010 – up almost $110bn from 2009.

To assist governments’ understanding of the nature and scale of their policies supporting fossil fuels, the OECD has compiled the first-ever Inventory of Estimated Budgetary Support and Tax Expenditures For Fossil Fuels.

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