19 February 2015
Norden, IISD Highlight Mitigation Potential of Fossil Fuel Subsidy Reform
Photo by IISD/ENB | Kiara Worth
story highlights

Low oil prices offer an opportunity for countries to remove consumer fossil-fuel subsidies argues a report by Nordic Council of Ministers and the Global Subsidies Initiative (GSI) of the International Institute for Sustainable Development (IISD).

GSI has also launched a free model for estimating the impact of fossil-fuel subsidy reform (FFSR) on countries' greenhouse gas (GHG) emission reductions.

logos_nordic_iisd_gsi10 February 2015: Low oil prices offer an opportunity for countries to remove consumer fossil-fuel subsidies, argues a report by the Nordic Council of Ministers and the Global Subsidies Initiative (GSI) of the International Institute for Sustainable Development (IISD). GSI has also launched a free model for estimating the impact of fossil-fuel subsidy reform (FFSR) on countries’ greenhouse gas (GHG) emission reductions.

The study, titled ‘Fossil-Fuel Subsidies and Climate Change: Options for Policy-Makers within Their Intended Nationally Determined Contributions,’ reviews existing research on the fossil fuel subsidy reform (FFSR) and related implications for GHG emissions, and proposes a process for countries to include FFSR and emission reductions in their intended nationally determined contributions (INDCs).

Stressing that FFSR is a key tool to unlock global dependency on carbon, the study notes that even conservative models, which only take into account consumer subsidies, estimate that the removal of fossil fuel subsidies globally would lead to a 6-13% GHG emission reduction by 2050.

The report suggests that FFSR “can play an integral role” in the negotiations under the UN Framework Convention for Climate Change (UNFCCC) on a new international climate change agreement, including INDCs (workstream 1), and increasing pre-2020 ambition (workstream 2). It also outlines how FFSR generates domestic savings for governments, which can be invested in social welfare systems, energy efficiency, public transportation systems and low-carbon energy infrastructure, thereby contributing to sustainable development.

The study proposes that countries of the Group of 20 (G20) and the Friends of Fossil Fuel Subsidy Reform include FFSRs in their INDCs by describing plans to reform producer and consumer subsidies, and estimates of emission reductions from such policy changes. It also suggests that emerging economies and developing countries include emission reduction estimates from recent and planned FFSRs. It presents the GSI-Integrated Fiscal (GSI-IF) Model as a free tool available for countries to estimate the impact of FFSR on national GHG emission reductions.

The study was launched at a reception hosted by the Friends of Fossil Fuel Subsidy Reform during the Geneva Climate Change Conference, held from 8-13 February 2015, in Geneva, Switzerland. The members of the group are Costa Rica, Denmark, Ethiopia, Finland, New Zealand, Norway, Sweden and Switzerland.

The publication was reported on by the Partnership on Sustainable Low Carbon Transport (SLoCaT), which mobilizes global support for reducing the growth of greenhouse gas (GHG) emissions generated by land transport in developing countries while maximizing the contribution of the sector to poverty eradication and sustainable development. [SLoCaT Press Release] [IISD Press Release] [Publication: Fossil-Fuel Subsidies and Climate Change: Options for Policy-Makers within Their Intended Nationally Determined Contributions] [Friends of Fossil Fuel Subsidy Reform Webpage] [IISD RS Coverage of the Geneva Climate Change Conference]