Research Press Release

Climate science: Assessing the impacts of fossil fuel subsidy removal


February 8, 2018

Ending fossil fuel subsidies would have a relatively small impact on global energy demand and carbon dioxide emissions and would not increase renewable energy use by 2030, according to a modelling study published in this week’s Nature. The results show that terminating subsidies would reduce emissions in fossil fuel exporting countries. However, in most regions it would deliver smaller emission reductions than required by Paris Agreement climate pledges, and in some regions might lead to increased emissions.

In 2016,the G20 countries reaffirmed their 2009 commitment to phase out fossil fuel subsidies, hoping that this would have a significant role in mitigating climate change by discouraging inefficient energy consumption and levelling the playing field for renewables. Despite these goals, it is unknown whether removing such subsidies - even worldwide - would substantially affect climate change mitigation.

Jessica Jewell and colleagues used five Integrated Assessment Models (IAMs) to evaluate the global and regional effects of removing fossil fuel subsidies on emissions and energy demands. They find that the three oil- and gas-exporting regions - the Middle East and North Africa, Russia and Latin America - accounted for about two-thirds of all fossil fuel subsidies worldwide in 2015. Developing and emerging economies (India, China, the rest of Asia and Africa) currently have lower subsidies than the fossil fuel exporters, but their subsidies may grow faster in the future. Without reform, subsidies in India could become comparable to those in Latin America and Russia by 2030.

The authors conclude that subsidy removal would result in the largest CO2 emission reductions in high-income oil- and gas-exporting regions where the reductions would exceed the climate pledges of these regions and where subsidy removal would affect fewer people living below the poverty line than in lower-income regions. However, a global subsidy removal programme could produce increased emissions in regions such as India and Africa, where oil and natural gas would probably be substituted for more carbon-intensive coal.

DOI:10.1038/nature25467 | Original article

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