A new report argues that axing fossil fuel subsidies in 20 economies would cut global carbon emissions by 2.8 gigatonnes (Gt) within five years.
According to the major new study from the International Institute for Sustainable Development (IISD) and the Nordic Council of Ministers, scrapping fossil fuel subsidies could slash carbon emissions across an economy by around 11 per cent.
The report argues that policymakers can no longer ignore the economic savings on offer from drastic fossil fuel subsidy reform.
The report, just released and titled Tackling Fossil Fuel Subsidies and Climate Change: Levelling the energy playing field, analysed fossil fuel subsidies across 20 major economies with relatively high levels of financial support for fossil fuel industries, including the United States, China, India, Russia, and Saudi Arabia.
It concluded phasing out fossil fuel subsidies between now and 2020 would cut carbon emissions by an average of 11 per cent for each economy.
It added that taking 30 per cent of the financial savings realised by ending subsidies and re-investing it in low carbon infrastructure would push average carbon savings up to 18 per cent by 2020.
In total, the report predicted 2.8Gt of CO2 would be removed from the atmosphere through to 2020 if the economies studied phased out fossil fuel subsidies.
“The numbers point to an important opportunity for both national carbon emissions reductions, and for financing the transformation of our energy systems,” said Scott Vaughan, president-CEO of IISD, in a statement.
British environmental news website BusinessGreen reports Anna Lindstedt, Climate Ambassador for Sweden, said the financial savings on offer for cash strapped governments from fossil fuel subsidy reform were considerable.
“With average yearly financial savings to governments of around US$ 93 per tonne of carbon removed from the system, fossil fuel subsidy reform is one policy tool that governments can no longer afford to ignore,” she said.
The report also demonstrated how the level of carbon savings on offer through fossil fuel subsidy reform varies considerably from country to country.
For example, it estimated Iraq, Venezuela, and Saudi Arabia could all cut emissions by more than 30 per cent by phasing out subsidies and using some of the money to invest in clean technologies.
However, the savings on offer for the US stood at less than one per cent.
The report follows a recent study from the OECD that revealed fossil fuel subsidies have been curbed slightly in recent years.
However, the OECD report still saw the world’s richest countries and fastest-emerging economies subsidising fossil fuels to the tune of between US$160bn and US$200bn in the four years through to 2014.
The G20 has repeatedly pledged to phase out “inefficient fossil fuel subsidies that encourage wasteful consumption”, acknowledging it represents one of the simplest mechanisms for curbing global carbon emissions.
However, a recent IMF report estimated that globally fossil fuel subsidies were still handed out at a rate of US$10m a minute.
