As energy prices spike, governments reach for the dirtiest tool in the box

“THIS REFORM will increase our energy security...and it will help us combat the threat posed by climate change.” Those hopeful words were uttered by Barack Obama, then America’s president, at the end of a meeting of the G20 group of countries in Pittsburgh in 2009. The gathered leaders had agreed to phase out subsidies for fossil fuels, which, by encouraging the use of polluting fuels, tilt the playing field against cleaner alternatives. Twelve years later, however, fossil-fuel subsidies are still hanging on. And as a severe energy-supply crunch leads to soaring prices around the world, they are making something of a comeback.

Ministers from the European Union held an emergency meeting this week to discuss how to respond to the price spikes, but failed to agree on a plan. National politicians, however, are turning to subsidies and price caps. Italy is considering spending more than €5bn ($5.8bn, or 0.3% of GDP) this year and next to reduce the price of natural gas and power for consumers. France will extend its cap on household-gas prices until the end of next year.