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Removing fossil-fuel subsidies results in huge benefits

Removing fossil-fuel subsidies results in huge benefits for the climate

GENEVA—11 February 2015—Eliminating the hundreds of billions of dollars that governments are spending on fossil-fuel subsidies would reduce global greenhouse gas emissions by between 6 and 13 per cent by 2050.

This is according to a new report by the International Institute for Sustainable Development (IISD) which demonstrates the considerable impact that removing fossil-fuel subsidies would have on climate change. In 2014, subsidies for the consumption of fossil fuels amounted to U$543 billion, according to the International Energy Agency.

“The evidence is clear—subsidizing the consumption of fossil fuels is hugely detrimental to the climate,” said Scott Vaughan, president and CEO of IISD. “And they come at a large opportunity cost. The billions of dollars spent on these subsidies means less money is available for clean energy, health, education and infrastructure.”

The report—which draws on a model developed by IISD’s Global Subsidies Initiative (GSI), namely the Integrated Fiscal Model—finds that reallocating a portion of the savings into energy efficiency and renewable energy would enable countries to maintain reduced emissions even as their populations and economies grow.

This week, country delegates are meeting in Geneva to agree on measures to mitigate climate change. Negotiators will need to identify and submit their mitigation measures in the coming year in the lead-up to an international climate change conference in Paris.

“Fossil-fuel subsidy reform is a feasible and cost-effective commitment that countries are implementing, or seriously considering, and which could support an agreement in Paris,” said Laura Merrill, a senior researcher with GSI.

The GSI’s Integrated Fiscal Model enables countries to estimate their domestic emissions reductions from a phased removal of fossil-fuel subsidies.

The report, supported by the Nordic Council of Ministers, is available here.


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