10 December 2014: The Friends of Fossil-Fuel Subsidy Reform and the Global Subsidies Initiative (GSI) held an event on ‘Maximizing Contributions to Emissions Mitigation from Fossil-Fuel Subsidy Reform’ on the sidelines of the Lima Climate Change Conference. The event outlined support available to countries undergoing subsidy reform and launched the GSI publication ‘The Impact of Fossil-Fuel Subsidies on Renewable Electricity Generation.’

Panelists reviewed opportunities to strengthen the subsidy reform process and direct savings towards investment in sustainable energy systems. They also explained how countries can utilize mitigation of emissions from subsidy reform within the UNFCCC process, including through post-2020 national contributions.

Simon Buckle, Organisation for Economic Co-operation and Development (OECD), stressed that fuel subsidies distort market prices of energy, which already fail to take into account negative social externalities. He drew attention to the OECD’s ‘Inventory of Estimated Budgetary Support and Tax Expenditures for Fossil Fuels,’ which promotes data transparency and availability, which he described as key to achieving subsidy reform.

Jeremy Leggett, Solarcentury, explained that the renewable energy subsidy regime is threatened by pressures from oil and gas lobby groups, emphasizing that energy sector change will depend on how subsidies are regarded in the US shale gas discussion. He highlighted a recent announcement that the Bank of England is conducting a probe on whether fossil-fuel companies pose a threat to overall financial stability.

Leonardo Martinez-Diaz, US Treasury Department, described fossil-fuel subsidies as unfair and regressive and burdening lower income households. He applauded efforts toward transparency through peer review, in which the US and China will participate.

James Close, Climate Change Group, World Bank, advocated reinvesting the savings from subsidy reform into social development programmes and highlighted the World Bank’s Energy Sector Management Assistance Program (ESMAP), which assists governments in creating measures to cushion populations from effects of fossil-fuel subsidy reform.

Laura Merrill, GSI, noted positive side effects of fossil-fuel subsidy reform, such as innovation and energy efficiency, and stressed that, with decreasing oil prices, the time for fossil-fuel subsidy reform is now.

The Friends of Fossil-Fuel Subsidy Reform are Costa Rica, Denmark, Ethiopia, Finland, New Zealand, Norway, Sweden and Switzerland. The GSI is a programme of the International Institute for Sustainable Development (IISD). [IISD RS ENBOTS Coverage] [IISD RS ENBOTS Video Coverage of Side Event] [IISD RS Coverage of Lima Climate Change Conference] [GSI Event Announcement] [GSI Publication Webpage] [Publication: The Impact of Fossil-Fuel Subsidies on Renewable Electricity Generation]