FT: Ending subsidies is “An idea whose time has come”

I don’t know how many G20 leaders will have time to read the FT website today, but they should. The paper’s editorial is nothing short of staggering.

It starts by stating “As addictions go, the world’s addiction to fossil fuels is a killer.”

Coming from the mouthpiece of one of the world’s financial capitals, which is still heavilly addicted to fossils fuels itself, that is quite some admission. But the rest of the Editorial is equally as eye-opening:  “ US President Barack Obama has a big idea on how to help the world kick the habit: the elimination of fossil fuel subsidies globally, amounting to over $300bn every year.”

The editorial goes onto say that “Elimination of fuel subsidies – for producers and consumers – is an idea whose time has come.”

The editorial mainly focuses on consumption subsidies, rather than production, and talks about consumption subsidies “tend to lock developing countries into a needlessly profligate development path, heavily skewed towards fossil fuel.”

The editorial ends with a radical suggestion: “If the world really wants to get to grips with reducing its dependency on fossil fuels, eliminating subsidies both in the developing and developed world – over a period of years – is a good start. If there are transition problems, perhaps revenues from a tax on aeroplane kerosene could help.”

The fact that the FT is calling for an end to subsidies is highly important, but the fact that it calls for taxes on aircraft fuel as a transition tool is nothing short of amazing. How times change.

I bet Willie Walsh from BA was chocking on his corn-flakes this morning ….