Consumer Fossil Fuel Subsidies

The International Institute for Sustainable Development (IISD) is conducting a study on fossil fuel subsidies as part of its Global Subsidies Initiative (GSI). The GSI is dedicated to research and awareness building on government subsidies and their impacts on sustainable development. In cooperation with a growing international network of research and media partners, the GSI seeks to lay bare just what good or harm public subsidies are doing and to encourage public debate and awareness of the options that are available for reform.  IISD’s Trade Knowledge Network (TKN) is assisting with this call for proposals by reaching out to its partner organizations. TKN is a global collaboration of research institutions working on issues of trade, investment and sustainable development.

Trevor Morgan is the principal author of the UNEP report released last month on energy subsidies and climate change, titled “Reforming Energy Subsidies: Opportunities to Contribute to the Climate Change Agenda”. He recently re-joined the International Energy Agency (IEA), having previously founded the independent energy-consulting firm, Menecon Consulting. The GSI reached Mr. Morgan at his office in Paris.

A report from a coalition of Canadian environmental organizations has called on the Province of Ontario to eliminate subsidies and the health and environmental costs externalized to the rest of society as a result of burning coal, which benefit the generation of electricity.

Many countries in the developing world are concerned about the impact of high oil prices on their economic growth. This is the case not only in Asia, but also in Latin America, where subsidies are often used to lower the consumer price of petroleum products, at heavy cost to public budgets.

People invariably ask, given we have only recently started in this business, why did we choose to work on biofuels? In deciding research priorities we have several criteria. One is that we would not try to duplicate the work of others. Another is that when we look into subsidies to a particular sector, the sector should be one that is subsidized by many countries.

The recent surge in international energy prices has placed energy subsidies at the forefront of the economic policy agenda in many countries, particularly where government interventions are intended to keep prices low to households and industry, or to protect indigenous energy industries from foreign competition.