IISD GSI Event: Fossil-Fuel Subsidies Reform Can Finance Development
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Reforming fossil-fuel subsidies can free up funds for investing in sustainable development and reduce global greenhouse gas (GHG) emissions by approximately 10%, according to a high-level side event held at the third International Conference on Financing for Development (FfD3) in Addis Ababa, Ethiopia.

Participants also underlined that current low international energy prices create a window of opportunity for fossil-fuel subsidy reform.

gsi-fffsr 14 July 2015: Reforming fossil-fuel subsidies can free up funds for investing in sustainable development and reduce global greenhouse gas (GHG) emissions by approximately 10%, according to a high-level side event held at the Third International Conference on Financing for Development (FfD3) in Addis Ababa, Ethiopia. Participants also underlined that current low international energy prices create a window of opportunity for fossil-fuel subsidy reform.

The event focused on how best to redirect subsidies to finance development priorities. Government representatives described their experiences with fossil-fuel subsidy reform, and the Global Subsidies Initiative (GSI) of the International Institute for Sustainable Development (IISD) and the International Monetary Fund (IMF) presented research on subsidies.

The GSI explained how the Philippines, Morocco and Indonesia have successfully linked reform efforts to social welfare programmes. It highlighted that, apart from emission reductions achieved by removing incentives for carbon-intensive fuels, emissions can be reduced further by reallocating savings from reform to energy efficiency and renewable energy.

Speaking on lessons learned in his country, Kare Chawicha, Ethiopian State Minister for Environment, said the removal of fossil-fuel subsidies in 2008 has contributed greatly to the economic development of Ethiopia, partly through investments in hydro, wind, geothermal and solar power generation.

In his closing remarks, Per Bolund, Swedish Minister for Financial Markets and Consumer Affairs, called fossil-fuel subsidy reform “the missing piece of the climate change puzzle” and described how Sweden’s carbon tax, introduced in 1991, has contributed to the creation of new industries in its growing economy. He invited countries and organizations worldwide to support the Fossil-Fuel Subsidy Reform Communiqué, which promotes the elimination of inefficient fossil-fuel subsidies in the lead-up to the Paris Climate Change Conference in November-December 2015.

The event, which was titled ‘Financing Development from Fossil-Fuel Subsidy Reform: Lessons Learned from Country Experiences,’ was organized by GSI. It was supported by the Government of Finland and the Friends of Fossil Fuel Subsidy Reform (FFFSR). FFFSR is an informal group of countries not part of the Group of 20 (G-20) that aims to build political consensus on the importance of fossil-fuel subsidy reform. [IISD RS Sources] [FFFSR Website] [IISD GSI Website]


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