External Publications
2018.01
Date: 8/2/2018

Limited Emission Reductions from Fuel subsidy Removal except in Energy-exporting Regions


Authors:

Jessica Jewell (Energy Program - International Institute for Applied Systems Analysis, Centre for Climate and Energy Transformations and Department of Geography - University of Bergen); David McCollum (Energy Program - International Institute for Applied Systems Analysis, Howard H. Baker Jr. Center for Public Policy - University of Tennessee); Johannes Emmerling (Fondazione Eni Enrico Mattei, Centro Euromediterraneo sui Cambiamenti Climatici); Christoph Bertram (Potsdam Institute for Climate Impact Research, Member of the Leibniz Association); David E. H. J. Gernaat (Copernicus Institute for Sustainable Development - University of Utrecht, PBL Netherlands Environmental Assessment Agency); Volker Krey (Energy Program - International Institute for Applied Systems Analysis); Leonidas Paroussos (Department of Electric Power, School of Electrical and Computer Engineering - National Technical University of Athens); Loïc Berger (Fondazione Eni Enrico Mattei, Centro Euromediterraneo sui Cambiamenti Climatici, Department of Economics and Quantitative Methods - IESEG School of Management LEM-CNRS); Kostas Fragkiadakis (Department of Electric Power, School of Electrical and Computer Engineering - National Technical University of Athens); Ilkka Keppo (UCL Energy Institute - University College London); Nawfal Saadi (UCL Energy Institute - University College London); Massimo Tavoni (Fondazione Eni Enrico Mattei, Centro Euromediterraneo sui Cambiamenti Climatici, Department of Management, Economics and Industrial Engineering - Politecnico di Milano); Detlef van Vuuren (Copernicus Institute for Sustainable Development - University of Utrecht, PBL Netherlands Environmental Assessment Agency); Vadim Vinichenko (Department of Environmental Sciences and Policy - Central European University); Keywan Riahi (Energy Program - International Institute for Applied Systems Analysis - Institute of Thermal Engineering, Graz University of Technology)

Type: Journal
Published in: Nature, 554, pages 229–233

Abstract

Hopes are high that removing fossil fuel subsidies could help to mitigate climate change by discouraging inefficient energy consumption and levelling the playing field for renewable energy. In September 2016, the G20 countries re-affirmed their 2009 commitment (at the G20 Leaders’ Summit) to phase out fossil fuel subsidies and many national governments are using today’s low oil prices as an opportunity to do so. In practical terms, this means abandoning policies that decrease the price of fossil fuels and electricity generated from fossil fuels to below normal market prices. However, whether the removal of subsidies, even if implemented worldwide, would have a large impact on climate change mitigation has not been systematically explored. Here we show that removing fossil fuel subsidies would have an unexpectedly small impact on global energy demand and carbon dioxide emissions and would not increase renewable energy use by 2030. Subsidy removal would reduce the carbon price necessary to stabilize greenhouse gas concentration at 550 parts per million by only 2–12 per cent under low oil prices. Removing subsidies in most regions would deliver smaller emission reductions than the Paris Agreement (2015) climate pledges and in some regions global subsidy removal may actually lead to an increase in emissions, owing to either coal replacing subsidized oil and natural gas or natural-gas use shifting from subsidizing, energy-exporting regions to non-subsidizing, importing regions. Our results show 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.

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Limited emission reductions from fuel subsidy removal except in energy-exporting regions

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