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Fossil Fuel Subsidy Reform: From Rhetoric to Reality

Fossil Fuel Subsidy Reform: From Rhetoric to Reality

Full Title: Fossil Fuel Subsidy Reform: From Rhetoric to Reality
Author(s): Shelagh Whitley and Laurie van der Burg
Publisher(s): The New Climate Economy
Publication Date: December 1, 2015
Full Text: Download Resource
Description (excerpt):

Worldwide, a significant proportion of the private sector receives some level of support, interventions and subsidies from the public sector. In the specific case of energy subsidies (of which fossil fuels are a subset) their use has been historically linked to supporting energy security, domestic energy production and access to energy.

In recent years, however, accounting for the full economic, social and environmental costs and benefits of subsidies for fossil fuels, along with the development of other government interventions to achieve the same objectives, has led to demands to start removing them. This report outlines the economic, social and environmental costs of fossil fuel subsidies, emerging evidence of the benefits to be derived from their reform and opportunities and processes to support such reform.

Fossil fuel subsidies can inhibit sustainable economic development by creating a burden on government budgets, reducing resources that could be put to more efficient use within the economy; increasing inequality and undermining access to affordable energy by benefiting the rich rather than the poorest members of society; decreasing the competitiveness of key industries, including low-carbon businesses, by discouraging investment in renewable energy and energy efficiency; increasing the risk of stranded assets (in the event of climate regulation) by encouraging exploration for and production of unburnable carbon; compromising energy security (compared to subsidising alternatives such as renewables and energy efficiency); damaging public health by increasing air pollution; and negating carbon price signals.

All statements and/or propositions in discussion prompts are meant exclusively to stimulate discussion and do not represent the views of OurEnergyPolicy.org, its Partners, Topic Directors or Experts, nor of any individual or organization. Comments by and opinions of Expert participants are their own.

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