Recent estimates of global fossil fuel subsidies for production and consumption are staggering, putting the total near US$730 billion annually or higher. In a time of economic hardship, dangerous climate change, and growing demand for reliable and cleaner sources of energy, these fossil fuel subsidies are a reckless and irrational use of taxpayer money and government investments.
There are two important ways that a fossil fuel subsidy phase out can benefit the climate. First, elimination of fossil fuel subsidies, and thus a reduction in the production and consumption of fossil fuels, can contribute to closing the gigatonne gap that exists between current mitigation pledges and the level of emissions reductions needed to stay below 2°C, let alone 1.5°C. Second, eliminating fossil fuel subsidies can free up finance needed for urgent mitigation and adaptation to climate change.
Countries have begun to recognize the emission reduction potential of eliminating fossil fuel subsidies. Ahead of the first negotiating session of 2012 under the auspices of the UN Framework Convention on Climate Change, Parties were requested to submit “views on options and ways for further increasing the level of ambition” under the newly created “work plan on enhancing mitigation ambition” within the Durban Platform for Enhance Action. Among these submissions, over 110 countries were represented in submissions that called for phase out of fossil fuel subsidies to be considered as a way to increase mitigation ambition. This includes all members of the Least Developed Countries grouping, the Alliance of Small Island States, the European Union, New Zealand, Norway, Switzerland, and the United States.
The time is now to strengthen political commitments to fossil fuel subsidy phase out with action to begin the transition from dirty fossil fuels to a cleaner energy economy. The steps described in this paper represent critical initial, overdue elements of that transition, and civil society globally stands at the ready to support government efforts to implement deadlines for phase out, reporting and international support for effective fossil fuel subsidy removal.
The report is an excerpt from: Low Hanging Fruit: Fossil Fuel Subsidies, Climate Finance, and Sustainable Development by Oil Change International for the Heinrich Böll Stiftung North America with contributions from the Vasudha Foundation (India) and Greenovation (China).