Fossil fuel subsidies need to go


Fossil fuel subsidies need to go – but what about the poorer people who rely on cheap energy?

Article on fossil fuel subsidies published by the Centre on Innovation and Energy Demand (CIED), this article was originally published by The Conversation and is written by Benjamin Sovacool, Director, CIED and Jessica JewellInternational Institute for Applied Systems Analysis (IIASA).

Almost all governments in the world joined the Paris agreement in 2015 in an effort to tackle climate change. In the same year, many of the same governments paid about US$400 billion in direct and indirect subsidies to help people buy fossil fuels.

Subsidies are government policies which make energy cheaper than under normal market conditions. They mostly go towards fossil fuels, since most of the energy we use comes from oil, gas or coal. As one of us noted in a review published in the journal Ecological Economics, fossil fuel subsidies are a popular and pervasive tool for helping people across the world have access to energy.

But it isn’t clear whether both trends are possible. Isn’t there a contradiction between subsidising fossil fuels and meeting Paris climate targets? And, if the subsidies are removed, won’t many people suffer without cheap energy?

Though recent analysis shows that the worldwide removal would not magically solve climate change, there are many reasons for reform beyond reducing emissions.

Subsidies are inefficient

There is increasing disillusionment with subsidies. As one senior OECD official puts it:

Subsidies often introduce economic, environmental, and social distortions with unintended consequences. They are expensive for governments and may not achieve their objectives while also inducing harmful environmental and social outcomes.

Therefore, there is growing political momentum against fossil fuel subsidies. In 2016, the G20 leaders reaffirmed an earlier pledge to phase them out. Read more…

Read the original article in The Conversation.
Further information about The Centre on Innovation Demand (CIED).
A brief overview of the End Use Energy Demand Centres (EUED) Centres.