Removing fossil fuel subsidies would have only a small effect on CO2 emissions and renewable energy use, new research has shown. The largest emissions savings would be in oil and gas exporting countries, where fewer poor people would be affected, and subsidy removal can be aided by currently low oil prices.
Fossil fuel subsidies amount to hundreds of billions of dollars worldwide, and removing them has been held up as a key answer to climate change mitigation. Unfortunately it is not the silver bullet many had hoped, IIASA-led analysis published in the journal Nature shows.
Removing fossil subsidies would only slightly slow the growth of CO2 emissions, with the result that by 2030 they would only be 1-5% lower than if subsidies had been maintained, regardless of whether oil prices are low or high. This equates to 0.5-2 gigatonnes (Gt/year) of CO2 by 2030, significantly less than the voluntary climate pledges made under the Paris climate agreement, which add up to 4-8 Gt/year and are themselves not enough to limit warming to 2°C.
“The reason for this small overall effect is two-fold,” says IIASA researcher Jessica Jewell, lead author on the paper. “First, these subsidies generally apply only to oil, gas, and electricity. That means that in some cases the removal of subsidies causes a switch to more emissions-intensive coal. Second, while these subsidies add up to substantial sums of money, the rate per unit of energy is not high enough to have a big effect on global energy demand, which would decrease by only 1-7% after subsidies are removed.”
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